Just as Norinchukin Bank appears to be gradually recovering from nearly $12 billion in massive losses from investing in US Treasuries and other overseas bonds, the Japanese banking giant now faces fresh scrutiny—its joint venture could be impacted by the bankruptcy of US auto parts giant First Brands Group.

Norinchukin Bank and Mitsui & Co. are the largest shareholders of JA Mitsui Leasing, whose wholly-owned subsidiary Katsumi Global provided $17.5 billion in trade financing to First Brands Group, which filed for bankruptcy at the end of September. It remains unclear whether this exposure will result in losses for JA Mitsui Leasing and its shareholders. However, this case could represent a setback for Norinchukin Bank as it works to strengthen risk management and repair its reputation.

Earlier this year, Norinchukin Bank disclosed in its annual report for the fiscal year ending March that it recorded massive losses of 1.8 trillion yen (approximately $11.7 billion) due to investments in US Treasuries and other overseas bonds. The company also stated that it had 1.24 trillion yen in unrealized losses on bonds in its portfolio.

Morningstar analyst Michael Makdad noted that while JA Mitsui Leasing is responsible for the day-to-day operational management of itself and its subsidiaries, Norinchukin Bank and Mitsui & Co., as shareholders, have the responsibility to vote in board member elections to appoint management. Michael Makdad pointed out: "If JA Mitsui Leasing incurs losses, these losses will also be reflected in its shareholders' financial statements, so they have the responsibility to elect directors who can appoint executives with sound risk control capabilities."

According to available information, JA Mitsui Leasing employs approximately 2,000 people and provides leasing and financing services across multiple industries. According to company documents, Norinchukin Bank holds a 43.4% stake, while Mitsui & Co. holds 42.3%. For the fiscal year ending March, the company had total assets of 3.4 trillion yen (approximately $22 billion) and net profit of 37.4 billion yen.

JA Mitsui Leasing CEO Keito Shimbu previously served as global investment head at Norinchukin Bank before taking his current position in 2021. Additionally, the joint venture's board members include other former executives from Norinchukin Bank and Mitsui & Co.

In its medium-term plan released in May, JA Mitsui Leasing stated that the company plans to strengthen collaboration with strategic partners including Norinchukin Bank and Mitsui & Co. The company has made overseas business expansion—particularly in the North American market—a key strategic priority.

Currently, Norinchukin Bank is working to rebuild its $266 billion securities investment portfolio. A Japanese government expert panel called on the bank in January to strengthen risk management, including introducing external directors with market expertise. Under new CEO Taro Kitabayashi's leadership, Norinchukin Bank achieved profitability in the first quarter and expects to maintain profitability for the full fiscal year.

Analyst Hideyasu Ban stated that while Norinchukin Bank's exposure in the First Brands Group bankruptcy case does not indicate fundamental flaws in the bank's risk management framework, it does create "reputational risk." He pointed out that given the bank has already suffered significant losses on bond investments, this "substantial exposure" coming to light now is "unfortunately timed."