Note 1-43

(43) The amount of category II credits (borrowers in danger of bankruptcy, bankrupt and effectively bankrupt borrowers) held by all banks and covered by general security/guarantee, such as real estate, is 11.7 trillion yen (March 2002). Supposing that all general security and guarantees were in real estate and that their value eroded by the same margin as the rate of decrease of commercial land prices (-8.3%, 2001), it would come to 970 billion yen. It would be necessary for banks to make additional provisions for most of them as second loss. Moreover, if loans to borrowers that need attention and to less creditworthy borrowers were included, banks' loan asset collection risk would go higher, as they have about 100 trillion yen worth of real estate as collateral and the value of this collateral has been decreasing rapidly.