WFlorid

Pricing Japanese Banks for Bankruptcy is Overdoing It

Dear Mr. Whitten,

While the headline is very interesting, I must say that it does not seem to be supported by facts. Could it be that you were sloppy in preparing this conclusion?

The most glaring issue is that you state that Japanese Banks as measured by Topix trade at a P/B ratio of 0.32. I checked the 95 publicly traded banks today that have positive P/B ratios. The average P/B is 0.85, the Mkt Cap weighted average is 1.1, and the median P/B was 0.77. I could find only one bank below your quoted level of 0.32, and that was Bank of Kochi, listed at 0.31. It is hard for me to understand how this data would lead to a market average of 0.32. Are these banks going bankrupt? Maybe, but I don't see how you could determine that from the price.

In addition, the chart shows "Nikkei" data, but the heading says banks are the cheapest "Topix" sector.

It seems to me that this is not the first time I noticed sloppy fact checking in your articles. I would be very grateful if you could work to improve the standards of Seeking Alpha, which I otherwise enjoy and find very useful.

Sincerely,

William L. Florida