Latest news with #Kitabayashi
Mint
22-05-2025
- Business
- Mint
Norinchukin Says It Will Be Cautious About Investing in JGBs
(Bloomberg) -- Norinchukin Bank, which suffered heavy losses with its investments in US Treasuries, said it will be 'very cautious' about buying Japanese government bonds. The firm expects further rate hikes in Japan, Chief Financial Officer Masaki Nagano said at a briefing. His remarks come amid a rout in the country's $7.8 trillion government bond market this week. Norinchukin's stance echoes other investors who are scrutinizing the fiscal health of countries from the US to Japan. Yields on US Treasuries are soaring as lawmakers debate a tax cut bill, while Japanese long-term debt has been sold off as the central bank pares its holdings in the face of emerging inflation. Nochu, as the firm is known, sold ¥17.3 trillion worth of so-called low-yielding assets made up of US and European government bonds as well as investment grade corporate bonds, a presentation showed. The company had ¥1.24 trillion of unrealized losses on bonds at the end of March compared with ¥2.2 trillion a year earlier. The agricultural lender reported a ¥1.8 trillion loss for the year ended in March, from a profit of ¥63.6 billion a year ago as it dumped billions worth of Treasuries and other foreign bonds. Nochu expects profit of between ¥30 billion to ¥70 billion for the current fiscal year, according to the presentation, sticking to a previous estimate. Buyers Recoil From Japanese Bonds in Warning on BOJ Tapering The Tokyo-based bank became one of the most prominent victims of a surge in US interest rates, which drove down the value of its foreign bond holdings, while a jump in dollar-funding costs outweighed returns from these securities. Its massive losses are a stark reminder of the risks posed by otherwise safe-haven assets like Treasuries and other sovereign bonds in time of macro-economic stresses. The bank is trying to rebuild its ¥40.3 trillion securities portfolio under new Chief Executive Officer Taro Kitabayashi, who took over the reins in April after his predecessor Kazuto Oku resigned to take responsibility for last fiscal year's losses. Kitabayashi, who has worked at the bank since 1994, was chief financial officer until the end of March. Kitabayashi is looking at a wide range of other investment assets, as he seeks to bring in non-rates assets to the portfolio. The company is investing in bonds, credit and alternative assets, CFO Nagano said at the briefing. The bank's holdings of collateralized loan obligations stood at ¥8.3 trillion as at the end of March, from ¥8.2 trillion three months earlier, as a result of new investments and the currency factor. This accounted for 20% of its portfolio. --With assistance from Takashi Nakamichi and Russell Ward. More stories like this are available on
Yahoo
15-04-2025
- Business
- Yahoo
Norinchukin Dodges Trump's Market Chaos After Selling Treasuries
(Bloomberg) -- Norinchukin Bank's disastrous last fiscal year has had one silver lining for Japan's $300 billion investing giant — it helped shield it from the turmoil unleashed by Donald Trump's tariffs this month. The Secret Formula for Faster Trains NYC Tourist Helicopter Crashes in Hudson River, Killing Six Even Oslo Has an Air Quality Problem Inside the Quiet, Extravagant Expansion of the Frick Collection Lisbon Mayor Wants Companies to Help Fix City's Housing Shortage New Chief Executive Taro Kitabayashi said the bank finished selling off its unprofitable US Treasury holdings by the end of March, thus avoiding the volatility last week as Trump's trade policies whipsawed markets. Through the end of December, the bank had unloaded ¥12.8 trillion of its holdings in US and European government bonds. The bank is not currently doing any large-scale buying or selling of sovereign debt, he said. The bank expects to meet its target of between ¥30 billion and ¥70 billion ($210 million — $490 million) in profit for the year that started April 1 and will take its time on committing capital to fresh investments until there is more clarity, Kitabayashi said in an interview. Norinchukin has a mid-term plan of revamping its ¥45.2 trillion portfolio after a surge in US interest rates drove down the value of its foreign bond holdings last year. 'The one certain thing is that uncertainty will increase,' he said. 'We are not in a situation where we need to rush into investment to make profit.' The former chief financial officer took the top job at the bank at the beginning of this month after ex-CEO Kazuto Oku resigned to take responsibility for last year's losses — which it expects to have reached roughly ¥1.9 trillion — stemming from its failed investment strategy. Kitabayashi has worked at the bank since 1994. Kitabayashi's priority is to shift the bank's holdings away from a heavy reliance on Treasuries and other sovereign bonds. He listed a wide range of other investment assets, including corporate bonds, equity indexes and securitized products, as well as infrastructure finance to fund renewable projects and data centers. A more diverse portfolio will help mitigate the kind of adverse conditions currently roiling markets. The bank still held about 23.1 trillion yen in bonds as of the end of December. Norinchukin holds about ¥8.2 trillion worth of collateralized loan obligations, an area where the firm's prominence as one of the world's biggest buyers of the securities had earned it the moniker of the CLO whale. Kitabayashi said while they remain one of the bank's most important investment assets, it does not plan to aggressively increase them. 'Diversification is important to deal with the heightened instability that's followed the inauguration of the Trump administration,' he said. 'Whatever happens, some parts may be negatively affected but other parts will have positive impacts.' The unlisted bank is owned by Japan's roughly 3,200 agricultural cooperatives, which provide it with both capital and deposits. They also depend on returns from the bank because of limited lending opportunities in the countryside. Consequentially, Norinchukin's loans account for far less of its assets than Japan's main commercial banks. As the bank remakes its portfolio, hiring talent, including seasoned risk managers will be critical, Kitabayashi said. Norinchukin's market portfolio has shrunk by about ¥15 trillion since March 2022. 'We will actively recruit people who can take on the challenge of portfolio diversification and boosting earnings,' he said. In so doing, he wants to avoid repeating the debacle that saddled the bank with last year's losses. It borrowed dollars on a short-term basis to finance long-term bond investment. The post-pandemic rate-hike drive by the US Federal Reserve caught Norinchukin off guard, as a surge in dollar funding costs outweighed returns from bonds bought when yields were low. With prices falling sharply, the bank had to sell bonds at a steep loss. At the time of investment, buying these highly liquid assets in a low-interest rate environment was 'a very rational decision and an efficient way to make money,' Kitabayashi said. 'But it was actually a big trap.' The Beauty Salon Recession Indicator Trump Is Firing the Wrong People, on Purpose World Travelers Are Rethinking Vacation Plans to the US How One MBA Grad Blew the Whistle on a $2 Billion Deal Cheap Consumer Goods Are the American Dream, Actually ©2025 Bloomberg L.P. Sign in to access your portfolio
Japan Times
15-04-2025
- Business
- Japan Times
Norinchukin dodges Trump's market chaos after selling Treasuries
Norinchukin Bank's disastrous last fiscal year has had one silver lining for Japan's $300 billion investing giant — it helped shield it from the turmoil unleashed by Donald Trump's tariffs this month. New Chief Executive Taro Kitabayashi said the bank finished selling off its unprofitable U.S. Treasury holdings by the end of March, thus avoiding the volatility last week as Trump's trade policies whipsawed markets. Through the end of December, the bank had unloaded ¥12.8 trillion of its holdings in U.S. and European government bonds. The bank is not currently doing any large-scale buying or selling of sovereign debt, he said. The bank expects to meet its target of between ¥30 billion and ¥70 billion ($210 million — $490 million) in profit for the year that started April 1 and will take its time on committing capital to fresh investments until there is more clarity, Kitabayashi said in an interview. Norinchukin has a mid-term plan of revamping its ¥45.2 trillion portfolio after a surge in U.S. interest rates drove down the value of its foreign bond holdings last year. "The one certain thing is that uncertainty will increase,' he said. "We are not in a situation where we need to rush into investment to make profit.' The former chief financial officer took the top job at the bank at the beginning of this month after ex-CEO Kazuto Oku resigned to take responsibility for last year's losses — which it expects to have reached roughly ¥1.9 trillion — stemming from its failed investment strategy. Kitabayashi has worked at the bank since 1994. Kitabayashi's priority is to shift the bank's holdings away from a heavy reliance on Treasuries and other sovereign bonds. He listed a wide range of other investment assets, including corporate bonds, equity indexes and securitized products, as well as infrastructure finance to fund renewable projects and data centers. A more diverse portfolio will help mitigate the kind of adverse conditions currently roiling markets. The bank still held about ¥23.1 trillion in bonds as of the end of December. Norinchukin holds about ¥8.2 trillion worth of collateralized loan obligations, an area where the firm's prominence as one of the world's biggest buyers of the securities had earned it the moniker of the CLO whale. Kitabayashi said while they remain one of the bank's most important investment assets, it does not plan to aggressively increase them. "Diversification is important to deal with the heightened instability that's followed the inauguration of the Trump administration,' he said. "Whatever happens, some parts may be negatively affected but other parts will have positive impacts.' The unlisted bank is owned by Japan's roughly 3,200 agricultural cooperatives, which provide it with both capital and deposits. They also depend on returns from the bank because of limited lending opportunities in the countryside. Consequentially, Norinchukin's loans account for far less of its assets than Japan's main commercial banks. As the bank remakes its portfolio, hiring talent including seasoned risk managers will be critical, Kitabayashi said. Norinchukin's market portfolio has shrunk by about ¥15 trillion since March 2022. "We will actively recruit people who can take on the challenge of portfolio diversification and boosting earnings,' he said. In so doing, he wants to avoid repeating the debacle that saddled the bank with last year's losses. It borrowed dollars on a short-term basis to finance long-term bond investment. The post-pandemic rate-hike drive by the U.S. Federal Reserve caught Norinchukin off guard, as a surge in dollar funding costs outweighed returns from bonds bought when yields were low. With prices falling sharply, the bank had to sell bonds at a steep loss. At the time of investment, buying these highly liquid assets in a low-interest rate environment was "a very rational decision and an efficient way to make money,' Kitabayashi said. "But it was actually a big trap.'
Reuters
14-04-2025
- Business
- Reuters
Japanese government bonds 'within range' as investment target, says Norinchukin's new head
TOKYO, April 14 (Reuters) - Japanese government bonds (JGBs) are now a natural investment target over the medium and long term for Norinchukin Bank as the return of inflation and higher interest rates have made them more attractive, its new chief executive said. Since last year, the Japanese investment heavyweight has been selling off tens of billions of dollars worth of foreign bonds after incurring massive losses on its holdings when interest rates in the U.S. and Europe rose higher than expected. High foreign exchange hedging costs also support JGB acquisitions, Taro Kitabayashi told Reuters in an interview. He added it was too early to say how President Donald Trump 's imposition of tariffs and the resulting impact on the global economy would affect Norinchukin's portfolio. Norinchukin, Japan's main financial institution for farm, forestry and fishery cooperatives, is one of Japan's largest institutional investors and its strategy is closely watched by market participants. Foreign government bonds had previously made up around 50% to 60% of its around 45 trillion yen ($315.50 billion) of market assets, Kitabayashi said, as it sought out higher returns abroad over the years of ultra-low interest rates in Japan. In the nine months ended December 2024, it sold off 12.8 trillion yen of low-yielding assets, mostly U.S. and European government bonds. In their stead, Norinchukin is considering new investments, including in JGBs, equities, real estate, private equity and infrastructure, but has not set targets, Kitabayashi said. "We could scarcely invest in Japanese government bonds when interest rates were negative and low, but now interest rates are higher, they naturally count as among our investment targets," Kitabayashi said. It expects to book a 1.9 trillion yen loss for the 12 months ended on March 31, but has forecast a modest profit of between 30 billion and 70 billion yen in the year to March 2026 on returns from new investments and higher interest rates in Japan. ($1 = 142.6300 yen)
Yahoo
14-04-2025
- Business
- Yahoo
Japanese government bonds 'within range' as investment target, says Norinchukin's new head
By Anton Bridge, Miho Uranaka and Tomo Uetake TOKYO (Reuters) -Japanese government bonds (JGBs) are now a natural investment target over the medium and long term for Norinchukin Bank as the return of inflation and higher interest rates have made them more attractive, its new chief executive said. Since last year, the Japanese investment heavyweight has been selling off tens of billions of dollars worth of foreign bonds after incurring massive losses on its holdings when interest rates in the U.S. and Europe rose higher than expected. High foreign exchange hedging costs also support JGB acquisitions, Taro Kitabayashi told Reuters in an interview. He added it was too early to say how President Donald Trump's imposition of tariffs and the resulting impact on the global economy would affect Norinchukin's portfolio. Norinchukin, Japan's main financial institution for farm, forestry and fishery cooperatives, is one of Japan's largest institutional investors and its strategy is closely watched by market participants. Foreign government bonds had previously made up around 50% to 60% of its around 45 trillion yen ($315.50 billion) of market assets, Kitabayashi said, as it sought out higher returns abroad over the years of ultra-low interest rates in Japan. In the nine months ended December 2024, it sold off 12.8 trillion yen of low-yielding assets, mostly U.S. and European government bonds. In their stead, Norinchukin is considering new investments, including in JGBs, equities, real estate, private equity and infrastructure, but has not set targets, Kitabayashi said. "We could scarcely invest in Japanese government bonds when interest rates were negative and low, but now interest rates are higher, they naturally count as among our investment targets," Kitabayashi said. It expects to book a 1.9 trillion yen loss for the 12 months ended on March 31, but has forecast a modest profit of between 30 billion and 70 billion yen in the year to March 2026 on returns from new investments and higher interest rates in Japan. ($1 = 142.6300 yen) Sign in to access your portfolio
