The recent financial troubles following the emergency takeover of Credit Suisse and the collapse of three US lenders have led to concerns over the potential risks to Japan’s banks from the fallout. Shares in Japan’s banks have been among the hardest hit in Asia since the crisis emerged this month. But, Japanese financial regulators and industry heads have said the nation’s financial system is sound, and analysts have been working to reassure worried bank investors. Here are four reasons why fears of a banking crisis in Japan are, for the most part, overblown. Firstly, Japanese banks have strong balance sheets, and although they are sitting on large paper losses on foreign bonds, including Treasuries, they tend to carry foreign bonds as available for sale, rather than held to maturity, which means that they’re booked at market value. Secondly, Japanese banks have a more diverse deposit base, made up of regular households and small businesses, who are unlikely to yank all their savings at once, and so are less likely to experience sudden withdrawals of billions of dollars in deposits. Thirdly, Japanese banks are unlikely to face pressure on their Additional Tier 1 (AT1) funding, as the main buyers of their notes are domestic institutional investors, who will likely keep purchasing them even if they are low-yielding. Finally, there has been little sign that Japanese banks have been caught short on dollar funding during the recent banking industry turmoil.