On the road to recovery

Over the course of the last couple of years, the Japanese banking sector has exhibited a remarkable turnaround in fortunes. When the Nikkei 225 Index tested the 7,600 level at the end of April 2003, the Japanese financial system was under intense pressure and the main banks were priced at levels that suggested something close to impending bankruptcy. However, the government underlined their commitment to supporting the banking sector via the massive bailout of Resona, Japan's fifth largest bank. This show of government support combined with structural changes and FSA pressure to reduce n...