Japan Disaster Won't Harm US Banks
US banks do not have huge exposure to the disaster unfolding in Japan.
On the face of it, JPMorgan has the biggest exposure, with $53.9 billion of outstanding loans to Japanese companies, according to data compiled by KBW from annual reports.
Goldman Sachs and Morgan Stanley come next, with Bank of America ranked fourth.
CROSS-BORDER EXPOSURE TO JAPAN
| U.S. BANKS | DOLLARS IN BILLIONS |
|---|---|
| JPMorgan | 53.9 |
| Goldman Sachs | 33.6 |
| Morgan Stanley | 19.1 |
| B of A Merrill | 17 |
“At the end of 2010, Bank of America had $17 billion in total cross-border exposure in Japan, which amounts to 0.75 percent of total assets,” a spokesman for Bank of America said in an email. “So I would describe our exposure as small.”
JPMorgan’s position was described as “manageable” by a spokeswoman. The bank takes into account “the types of exposures we have to counterparties in the country,” she said.
A spokeswoman for Morgan Stanley declined to comment on the bank’s exposure to Japan. Goldman Sachs did not respond to requests for comment by press time.
Perhaps the biggest risk to banks is the impact of the disaster on their capital markets businesses, Mike Mayo, analyst at CLSA said in a report.
Customer activity could be disrupted, and asset values might tank. But in the long run, investment banking could benefit as Japanese companies seek funds to rebuild. Equity and debt underwriting will thrive when this happens, Mayo says.
SOURCE: CLSA
As for retail banking, Citigroup is the bank with most exposure, according to Keefe, Bruyette & Woods. Citi got out of its Japanese consumer lending business in 2008, but it still has an important presence in Asia with 711 branches, some of which are in Japan.
Citigroup is “comfortable” with its exposure, said a spokesman. He pointed out the bank has been doing business in Japan since 1902 and expressed concern for the people of Japan.
