Shades Of “The Big Short”! Commercial RE Exposure Helps Crush Japan’s Aozora Bank (Follow Negative Profit Warning For NY’s Community Bancorp)

Confounded Interest ^ | 02/01/2024 | Anthony B. Sanders

[Kaiser8408a]

Shades of “The Big Short” and subprime crash of 2008.

Following a profit warning from New York Community Bancorp on Wednesday, largely attributed to continued turmoil in the commercial real estate sector (which led the bank to slash its dividend and bolster reserves leading to a 38% plunge in its shares and triggering the largest drop in the KBW Regional Banking Index since the collapse of Silicon Valley Bank last March) Japan’s Aozora Bank slashed the value of some of its US office tower loans by more than 50%, according to Bloomberg.

Like rows of falling dominoes, Aozora Bank, the 16th largest in Japan by market value, saw its shares plunge by 20% on Thursday after reporting a net loss of 28 billion yen ($191 million) for the fiscal year. This was in stark contrast to its earlier projection of a 24 billion yen profit.

Aozora wrote down the value of its non-performing office loans by 58%, including a 63% reduction in Chicago and between 51% and 59% in New York, Washington D.C., Los Angeles, and San Francisco – all of these cities are plagued with violent crime and controlled by radical Democrats.

In total, the bank’s US office loans were about 6.6% of its portfolio, or approximately $1.89 billion. It said 21 office loans worth $719 million were classified as non-performing, and as a result it increased its loan-loss reserve ratio on US offices to 18.8% from 9.1%.

Where will this lead? Likely more bank and pension fund bailouts. You didn’t really believe that hype about the Dodd-Frank banking legislation that there will never be another bank bailout did, you??

[desertsolitaire]

Remember when there was that big bank liquidity problem in 2008, when McCain put his Presidential campaign on hold to return to Washington DC to work on a bailout.
Was there much warning that things were that bad or did it catch us the general public by surprise mostly?

[dfwgator]

Remember when there was that big bank liquidity problem in 2008, when McCain put his Presidential campaign on hold to return to Washington DC to work on a bailout.

And McCain did what exactly there?

[desertsolitaire]

As I recall, big banks who had made risky loans including no documentation mortgages were deemed “too big to be allowed to fail” and were made whole again with taxpayer monies.