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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (6493)	9/18/1998 11:31:00 AM
From: Worswick	Respond to of 9980

Let's see where we are here. Union Bank of Switzerland backed away from a LTCB deal after they had bought a position in the bank last year. They concluded, my guess is there were no assets. UBS has to book a loss of $80 million on the deal. So. Now... For Private Use Only (C) The Financial Times "Standard & Poor's, the US ratings agency, yesterday warned that problem loans in the Japanese banking system could be equivalent to as much as 30 per cent of the country's gross domestic product - nearly twice official estimates. The agency said the banks' bad debts could be as high as 151,370bn ($1,122bn) compared with the Japanese government's figure of 87,000bn. The warning underlines the severity of the debt crisis that is threatening to overwhelm Japan's financial system, and will add to pressure on the government to implement measures to solve the problem. Legislation aimed at helping the banking sector deal with problem loans is stalled in parliament. The banks are facing huge losses caused by excessive lending in the 1980s and a collapse in clients' cash-flow, hit by the worst recession in 50 years. In addition, with the Nikkei average of 225 leading Japanese stocks at just 14,197, most of the banks will probably also have to declare further substantial losses on equity holdings in their interim results to September 30. The deterioration in the banks' financial strength was highlighted by yesterday's decision by S&P to downgrade the outlook of Dai-Ichi Kangyo, Industrial Bank of Japan, Sanwa Bank and Fuji Bank from "stable" to "negative". Separately, Moody's, another ratings agency, put the ratings of Dai-Ichi Kangyo, Mitsubishi Trust and Toyo Trust on review for possible downgrade. High-ranking US officials in Tokyo urged the Japanese government to try to reach a deal with the opposition and speed up implementation of the critical banking legislation. However, the political debate remained deadlocked as the opposition continued to reject proposals from the ruling Liberal Democratic party on what to do about ailing Long-Term Credit Bank of Japan." However.... from the paper today.. "The Japanese government confirmed on Friday that it would take control of the struggling Long-Term Credit Bank of Japan. But the government ruled out a capital injection for LTCB from the 13 trillion ($98.3bn) fund the government has set aside to recapitalise solvent but undercapitalised banks. Instead, the LTCB would be placed "under special public administration" while it sold its healthy assets on to another company before liquidating the rump. The move came after the ruling Liberal Democratic party and the opposition Democrats and Heiwa-Kaikaku parties finally reached a compromise over legislation to stabilise the financial sector after weeks of wrangling. The decision to place the LTCB, which was founded in 1952 to help rebuild Japan's industries after the second world war under state control was a key compromise to the opposition. The LDP originally wanted to keep LTCB in the private sector and bail it out with taxpayers' money. The government also agreed to draft legislation that would remove financial policy-making powers from the finance ministry and transfer them to a new independent body". Noothing like a positive spin to make everyone feel better. Now, you can see why all the best graduates go into the finance ministry from College.