Norinchukin Bank CEO Oku to Step Down Amid Rising Losses
Japanese lender Norinchukin Bank has announced that Chief Executive Officer Kazuto Oku will resign at the end of March. The resignation follows the bank's revised forecast for deeper losses due to soured foreign bond investments.
Replacing Oku effective April 1 will be Chief Financial Officer Taro Kitabayashi. The bank anticipates a loss of up to ¥1.9 trillion ($12.7 billion) for the year ending March, exceeding its previous projection of ¥1.5 trillion.
Norinchukin expects to return to profitability in the next fiscal year with net income between ¥30 billion and ¥70 billion. Kitabayashi's appointment comes amidst Norinchukin becoming a victim of rising US interest rates, which have led to a decline in the value of its foreign bond holdings and increased its dollar-funding costs relative to investment returns.
Kitabayashi faces the challenge of diversifying the bank's $300 billion investment portfolio and attracting external talent. "Norinchukin Bank's new management has the task of restoring the bank's stable profitability and restructuring its securities investment portfolio by disposing of unprofitable foreign bonds," said Tomoya Suzuki, a senior credit officer at Moody's Ratings.
In the first nine months of its fiscal year, the Tokyo-based bank reported losses of ¥1.4 trillion and ¥1.57 trillion in paper losses on its bond holdings.