Norinchukin chased yield abroad — the exit cost a record ¥1.8T loss

The Norinchukin Bank is the central bank and asset manager for roughly 3,300 Japanese agricultural cooperatives. During years of near-zero interest rates at home it loaded its balance sheet with foreign bonds and CLOs in search of yield. When US and European rates rose further than expected, those holdings carried heavy paper losses.

In 2024 the bank announced a plan to sell about $63 billion of foreign government bonds. The exit got worse before it got better: nine months into fiscal 2024 it had booked a ¥1.4 trillion loss on ¥1.57 trillion of bond losses. In February 2025 president Kazuto Oku, in the role since 2018, announced he would step down to take responsibility; CFO Taro Kitabayashi took over on 1 April 2025.

Final results on 22 May 2025 showed a record net loss of ¥1,807.8 billion for the year ended March 2025 — more than triple the previous record, the ¥572.1 billion lost in the Lehman year. The bank had sold ¥17.3 trillion of foreign bonds by book value and raised ¥1.4 trillion of capital strengthening from its members.

Even during the cleanup the bank kept buying the asset class that had hurt it: CLO holdings jumped 26% in a quarter to ¥8.2 trillion. A government panel had urged in January 2025 that the bank diversify and add board members with market experience. Norinchukin forecast a return to profit of ¥30–70 billion for fiscal 2025.

The exit cost a record ¥1.8T loss, the CEO stepped down, and the bank raised ¥1.4T from members.

Years of zero rates at home turned a cooperative clearing bank into one large bet on foreign rates staying low.

The exit itself was the second loss: selling underwater bonds converted paper losses into a record annual deficit.

Risk was re-added mid-cleanup — CLO holdings grew 26% in one quarter — so the restructuring kept trading the same markets it had just lost in.

Yield is the price of a risk you haven't priced yet. When a zero-rate institution buys foreign duration, the bet survives until rates move — then the exit costs more than the carry ever earned.