Tokyo, May 18: Long-suffering investors in Japanese banking shares are in for another nerve-racking week after the government's rescue of the country's fifth-biggest bank raised more questions about the sector's health. The government said after an emergency meeting on Saturday that it had agreed to throw a life-line to Resona Holdings after the Osaka-based bank said its capital adequacy ratios had fallen below legal limits needed to stay in business.
The government did not say how much it would spend, and Resona did not say how much it needed, but media reports said it could be as much as two trillion yen ($17.17 billion).
If bank shares get slugged, the Nikkei average could drop toward the 20-year lows it reached last month -- putting even more pressure on the banks' capital.
"Bank shares are likely to take a hit, and that would easily send the Nikkei average down below the 8,000 level," said Tetsuya Ishijima, senior investment strategist at Okasan Securities.
The Nikkei is expected to move between 7,800 and 8,200 after easing 0.43 per cent the previous week to 8,117.29. Bureau Report