TOKYO — In future histories of international high finance, September 1990 is entitled to a footnote as the month when Japanese banks looked to the United States as a possible source of capital.
After a decade of shopping their huge rolls of cash around the world, often undercutting competitors to get huge chunks of the "junk" bond issues that paid for the U.S. corporate takeovers of the 1980s, Japan's banks are themselves hunting for ways to borrow money.
They are not always finding it.
For the first time in a decade, key international rating houses have repeatedly downgraded major Japanese banks and put others on their "watch" lists for possible downgradings.
Ripples from the mounting problems of Japanese banks have reached far overseas. They range from the drying up of an important capital source for corporate takeovers to interest-rate worries for U.S. states and cities that rely on Tokyo-based letters of credit to help hold down interest rates on government-backed bonds.
The sources of Japanese banks' troubles this year are the mirror images of their two greatest strengths through the late 1970s and the 1980s: a strong stock market and low interest rates.
After a boom of more than a decade, the Tokyo Stock Exchange went into free fall through the late winter and early spring of 1990. It was just beginning a lackluster recovery when Iraq's Aug. 2 invasion of Kuwait sent prices through the floor again. By the end of September, the exchange's leading index, the Nikkei 225, was down by nearly half from last winter's high.
Japan's main banks all are members of keiretsu, groups of companies that hold large amounts of each other's common stock. For a decade, the immense inflation of price-to-earnings multiples on the Tokyo exchange, which reached 50 and 60 by late 1989, made expansion easy and profits in the banks' own operations less important.
With the exchange's successive crashes this year, banks estimated that the book value of their assets had dived by more than $116 billion from the end of March to the end of August. In a system that has emphasized banks' growth more than their profitability, that is equal to four years' pretax profits.
Japan's Finance Ministry Monday unveiled an emergency plan Monday to support the stock market. The ministry said it would allow investors more leverage in their stock market accounts, and raised the portion of insurance company assets that could go into stocks.
The rescue plan helped. After falling 761 points Monday, the 225-stock Nikkei index made its largest-even one-day gain Tuesday, climbing 2,676.55 points or about 13 percent to 22,898.41. The market then rebounded after a two-day halt in the rally. On Wednesday, the index fell 49 and on Thursday it fell 571 points. On Friday, it rose 549 points to close at 22,827.65.
Low interest rates lent additional power to the Japanese bank boom of the 1980s, but inflationary pressures have prompted the Bank of Japan, the nation's central bank, to more than double its benchmark rate -- from 2.5 percent to 6 percent -- in less than half a year.
The result of those twin reversals has been that some of the dour men who run Japan's collection of the world's biggest banks have begun to raise capital through innovations not usually associated with Otemachi, Tokyo's financial headquarters.
At least two big mainstream banks have issued subordinated debt instruments through subsidiaries in the Caribbean.
Last month, the Asian Wall Street Journal reported that Mitsubishi Bank, the world's fourth largest, was looking at the prospects of raising capital through a sale of stock in a U.S. subsidiary, San Francisco-based Bank of California.
Not all of the banks have reached so far afield, but the problems of Japan's biggest commercial banks led the Ministry of Finance to grant them permission last June to raise capital through subordinated debt schemes usually reserved for the country's long-term credit banks.
That set off such a flood of new subordinated debt issues that the ministry set up a queue to assure the big commercial banks "orderly access" to London and other big international capital markets.
Still, many of Japan's top 12 banks reportedly are finding takers for fewer than half of the billions of dollars in subordinated paper they are offering.
That is not because anyone doubts the banks' ability to pay their debts. It is because the instruments themselves -- obligations that put the lender in line behind several other categories of creditors -- can provide the bank's benefactor only a razor-thin margin if the bank is to keep interest on money it borrows lower than interest on money it lends.
Nobody in Japan is predicting a long string of bank failures or rescues comparable to those the United States has faced, or even mass layoffs such as those New York banks have begun to announce.