Japan’s financial institutions are preparing for fallouts from the increasingly tense situation in Ukraine. They have been narrowing down loans to Russia, with about 500 billion yen currently outstanding. Once economic sanctions are in place, settlement between the U.S. dollar, ruble, and yen may no longer be possible, so Japan’s megabanks are rushing to prepare alternative means for clearance and other operations.
According to the Bank for International Settlements (BIS), Japanese banks held approximately $3.4 billion (about 400 billion yen) in loans to Russia as of the end of September 2021. Most of these claims were associated with natural gas and other energy-related projects financed by the banks. The scale of the loan balance in Russia is equivalent to that in Qatar or South Africa and accounts for only 0.08% of total foreign loans outstanding, which is about $4.2 trillion.
The Financial Services Agency is currently gathering more detailed information, but it has expressed the view that “[the outstanding loans to Russia] will have no major impact on Japan’s financial system.”