Norinchukin Bank has announced that Chief Executive Officer Kazuto Oku will resign at the end of March, as the Japanese financial institution anticipates greater losses due to troubled foreign bond investments. Oku, 65, will be succeeded by Chief Financial Officer Taro Kitabayashi, who has been appointed to take over on April 1, as confirmed in a recent statement. The bank now projects a potential loss of up to ¥1.9 trillion ($12.7 billion) for the fiscal year ending in March, exceeding its earlier estimate of ¥1.5 trillion. However, it expects to return to profitability in the next fiscal year, forecasting net income between ¥30 billion and ¥70 billion.
Kitabayashi, 54, steps into the role amid challenges posed by rising US interest rates, which have negatively impacted the value of the bank’s foreign bond holdings and increased its dollar-funding costs beyond the returns from those investments. He will be tasked with diversifying the bank’s $300 billion investment portfolio and attracting more external talent. According to Tomoya Suzuki, a senior credit officer at Moody’s Ratings, the new management will need to navigate significant challenges in restoring stable profitability while restructuring the securities investment portfolio by divesting from unprofitable foreign bonds. In the first nine months of the fiscal year ending in March, the Tokyo-based bank reported losses of ¥1.4 trillion and recorded ¥1.57 trillion in paper losses on its bond holdings.
