Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (9383)	11/23/1997 12:13:00 AM
From: Dwight E. Karlsen	Read Replies (2) \| Respond to of 97611

It's okay Mohan..The weekends the market isn't open anyway, so people shouldn't expect the topic to stay rigidly on CPQ in every post. But, in the interest of including something interesting here, how is this: (oh sorry, it's not good news) Saturday November 22, 4:40 pm Eastern Time Japan's Yamaichi sees no way out, poised to shut By Brian Williams TOKYO, Nov 23 (Reuters) - Japan's oldest brokerage, Yamaichi Securities Co Ltd (8602.T), was poised on Sunday to shut its doors after a last-ditch review convinced the company there was no chance of survival, Japanese media and financial sources said. In a business failure that has set off shockwaves at home and abroad, the country's fourth-largest brokerage, laden down by a short-term credit crunch, shrinking business and high-profile scandals, plans to announce the decision on Monday, a national holiday in Japan. Company executives worked through the weekend to finalise arrangements with financial authorities on how to shut the 100-year-old institution in a way that would protect depositors and cause least turmoil to world financial markets. The Nihon Keizai Shimbun newspaper said on Sunday the Bank of Japan was set to extend Yamaichi an unsecured loan of several hundred billion yen (several billion dollars) to repay customers and prevent a financial crisis if the brokerage house collapses. A Yamaichi closure would be Japan's biggest post-war business failure and its third major financial sector collapse this month, joining second-tier brokerage Sanyo Securities Co Ltd and 10th-ranking commercial bank Hokkaido Takushoku Bank Ltd. The Nihon Keizai and Kyodo News Service both reported on Sunday Yamaichi directors had found no way out. Customer assets at Yamaichi totalled 24 trillion yen ($190 billion) at the end of September, down 20 percent from six months earlier, and more clients have withdrawn their assets. Yamaichi's shares ended at 102 yen on Friday, down dramatically from its high for the year of 525, set in early January. Kyodo said the demise of Yamaichi would leave behind an estimated three trillion yen ($23.8 billion) in unresolved debts. Yamaichi's crisis became more murky when a Finance Ministry official said there were suspicions of vast off-balance sheet liabilities exceeding 200 billion yen ($1.58 billion) from illegal trading practices in which brokerages temporarily shift investment losses from one client to another in order to prevent a favoured customer from having to report losses. ''According to Yamaichi sources, the brokerage has hidden from financial regulators the off-balance-sheet debts of more than 200 billion yen at its dummy companies on the British dependency of the Cayman Islands,'' Kyodo said. Options for the beleaguered Yamaichi narrowed considerably after main creditor Fuji Bank Ltd said it was not in a position to take responsibility for rescuing the ''Big Four'' brokerage. ''Directors of Yamaichi Securities Co on Saturday confirmed their intention to submit an application to the Finance Ministry to cease operations,'' the Nihon Keizai said. ''The decision, reached at an extraordinary board meeting, states that seeking approval to wind up operations is their 'principal policy' for dealing with the precarious financial situation.'' To repay customers, the Bank of Japan is set to extend an unsecured loan of several hundred billion yen, the paper said. Japan's Finance Ministry and central bank were in contact with authorities overseas to alleviate global concerns over Yamaichi's failure, especially in U.S. and European markets. The Bank of England said it was watching events closely. London-based staff of Yamaichi said they saw risks of a domino-effect across Japan, Asia and beyond if their brokerage is allowed to collapse. ''This could have a knock-on effect around the world,'' one senior Yamaichi executive in London said. ''This is a serious crisis for the whole Japanese financial system if Yamaichi closes, coming so close after Sanyo and Hokkaido.'' Because capital markets in Japan will be closed, London will be the first major market to deal with the fallout. Staff at Yamaichi in London have been on edge for weeks as the crisis has grown. Yamaichi sources said some of the firm's 7,500 staff at home and in 33 branches abroad had taken legal advice on personal and business contingencies ahead of Monday's decision. Japan faces the risk that banks would be contaminated by the fallout from Yamaichi. Trouble could also spread to life insurers who have invested heavily in loans to banks. The biggest international concern was that Japanese banks could be driven to cut their U.S. Treasury holdings to raise liquidity, an action that would have global repercussions. ---------------------