CEO of Norinchukin Bank to Resign Amid Foreign Bond Losses
Kazuto Oku, CEO of Norinchukin Bank, will resign at the end of March following substantial foreign bond losses. Oku takes responsibility for the billions of dollars in losses due to miscalculated foreign bond bets.
CFO Kitabayashi to Succeed Oku
Taro Kitabayashi, the current CFO, will succeed Oku as CEO effective April 1. The bank's supervisory committee is set to meet on Thursday to finalize the leadership transition.
Surge in Interest Rates Drives Losses
Norinchukin Bank has faced severe losses due to the surge in US interest rates, which negatively impacted the value of its foreign bond holdings. The bank's dollar-funding costs have exceeded the returns from these securities.
Calls for Diversification and External Talent
The new CEO will face demands to diversify the bank's $300 billion investment portfolio and attract outside talent. Kitabayashi has held various corporate positions at Norinchukin Bank since 1994 and is known for his expertise in planning, general affairs, and finance.
Government Panel Recommends Changes
A government panel recently urged Norinchukin Bank to enhance portfolio diversification, strengthen risk management, and appoint board members with financial market experience, including outsiders.
Investment in Risky Assets
In recent months, Norinchukin Bank has increased investments in leveraged loans, despite its limited lending operations. The bank's losses in the first nine months reached ¥1.4 trillion, close to its projected annual loss of ¥1.5 trillion.
Previous Leadership Changes
This is not the first time Norinchukin Bank has made leadership changes due to investment missteps. In 2009, CEO Hirofumi Ueno resigned after losses on asset-backed securities during the global financial crisis.