Hello Paul
Japan not a happy place, sooner or later someone over there
will need gold.Sanyo's failure signals start of 2nd-tier shake-up
------------------------------------------------------------------------
Tadashi Kawato Yomiuri Shimbun Staff Writer
Sanyo Securities Co.'s filing Monday for reorganization under the Corporate Rehabilitation Law, a de facto declaration of bankruptcy, was a clear sign that the securities sector faces a life-and-death struggle to retain customers and regain public trust.
After a series of bankruptcies of small and midsize banks followed by the failure of Nissan Mutual Life Insurance Co. in April, Sanyo Securities' failure means that the nation's banki ng and securities industry will have to undergo massive realignment to cope with the ongoing Big Bang financial reforms.
Moreover, the Finance Ministry and the Bank of Japan also face the challenge of maintaining order in the industry.
Sanyo Securities' failure marks the first time a full-service brokerage house, capitalized at over 3 billion yen and with a nationwide network of branches, has gone under since 1968, when licensing was introduced to counter a slump in the securities industry.
After licensing began, it was believed that securities companies faced little risk of bankruptcy, as long as they were able to arrange financing from banks, because the firms could earn daily commissions from equities transactions. But this confidence has now been shattered.
Stock prices have been lackluster since the burst of the bubble economy in 1990. Trading volume on the Tokyo Stock Exchange has plummeted to less than half that reached at the peak of the bubble, hitting brokerage houses hard.
This year in particular, individual investors have increasingly left the market, which has hurt the revenue of small and midsize securities companies, since they are more dependent on individual investors.
The battle for survival had already begun before the Sanyo failure. In May, Osaka-based Ogawa Securities Co. decided to close business. This was followed by Yamakichi Securities Co.'s sale of its Tokyo Stock Exchange membership to a foreign brokerage. Next, Echigo Securities Co. in Niigata was forced to stop trading because of losses it sustained through embezzlement.
Sanyo Securities' failure means that the cutthroat fight for market share has spread to the second-tier brokerages, marking a new phase in restructuring.
Only four securities companies out of 14 major and second-tier firms marked recurring profit in midterm settlement in September. |
