UK / JAPAN - Bank failures look set to plunge Japan's economy into crisis, Tilney Asset Management is warning pension funds with investments there.
Japanese banks have seen massive increases in bad loans pushing many of them towards insolvency. Tilney Asset Management’s chief economist Peter Bickley said: “We think that as the banks come to pull together their balance sheets at the fiscal year end, the truth will come out and one after another they will go bust.”
Bickley added: “We think this will be the first part of the solution. To prevent the entire economy from imploding, the authorities will be forced to allow the banks to fail but with protection for the innocent depositors.”
The fund manager thinks that after the initial crisis these bankruptcies will help boost the economy. Bickley noted: “We expect the currency to be hit hard and the stock market, which has recently seen a strong rally, to be hit even harder. Then, maybe, Japan might start to get interesting as an investment proposition.”
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