The long dark cloud of recession has hovered over Japan for the past decade. The banks have been the most visibly humbled casualties of this period: what were once the world's largest and strongest institutions have been crushed beneath a mountain of bad debts accumulated during the bubble era of inflated asset prices in the 1980s.

The signs are that things will get worse rather than better for the banks in the short-term. As Japan's recession continues, cyclical bad debts are stacking up alongside the bubble era debts.