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UK banks have £136bn exposure to Japan

UK banks have around £136bn of exposure to Japan, according to figures from the Bank of England.

Last Friday’s earthquake and tsunami wiped out many towns on the east coast and badly damaged a nuclear plant in Fukushima. Japan is still working to try to avert a full-scale nuclear disaster.

According to the Press Association, the £136bn bank exposure estimate includes loans to Japanese firms in Britain and holdings in Japanese government debt.

The FSA says it is “too soon” to estimate the scale of losses for insurers from the disaster.

FSA prudential risk team member David Rule told the Press Association: “The risk we think is manageable on the banking side. On the insurance side it is early days.”

Some estimates put the potential claims bill from the earthquake alone at as much as £22bn.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. From the article: “the £136bn bank exposure estimate includes loans to Japanese firms in Britain and holdings in Japanese government debt”

    So as long as Japan doesn’t go bust we’re ok.

    A think the headling, whilst technically correct, is a little misleading.

  2. Perhaps also has to be placed in context – UK banks’ exposure to Ireland is about £140 billion.

  3. @ Chris F

    The value of Japanese government debt held by UK banks will depend in part on what currency it is denominated in, because of currency exposure.

    If the banks have hedged any currency exposure that they have on this debt, the creditworthiness of the counterparties to the hedges will have a bearing on the effectiveness of the hedges.

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