Japanese Banks

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.

TOKYO - The biggest takeover battle in Japanese history got even bigger yesterday as Sumitomo Mitsui Financial Group sought to disrupt a rival's expansion plans with a $29 billion hostile bid for UFJ Holdings. Sumitomo Mitsui, Japan's third-largest bank, offered to exchange one share of its stock for each share of UFJ, a bid that values UFJ at about $29.14 billion and represents a 23 percent premium over UFJ's share price yesterday. The offer marked an escalation in the battle for UFJ, the smallest and weakest of Japan's top four banks.

New York--First came the radios and the cars, and by the 1980s it seemed almost inevitable: where Sony and Toyota had gone, large Japanese banks would follow.And come they did, spending billions of dollars on branch acquisitions in California, leveraged buyouts in New York and corporate loans throughout the country.As a historical note, Japanese banks were critical in financing the disastrous acquisition of Federated Department Stores by Robert Campeau, and equally important in pulling the plug on what would have likely been the disastrous $300-a-share buyout of UAL Corp.

WASHINGTON -- The head of the Bank of Japan strongly hinted yesterday that he was prepared to reverse course and act to halt a three-month-long rise in the value of the Japanese yen, before it chokes off Japan's fragile economic recovery and triggers further clashes with the United States.In early trading in Australia and Asia, the vaguely worded announcement from Masaru Hayami, governor of the Bank of Japan, and a communique issued Saturday night by the finance ministers of the Group of Seven (G-7)

TOKYO -- Japan's mammoth banks, international lending's macho money dealers of the late 1980s but the shy maidens of the past 10 months, are deep in a shake-up at home that will preoccupy them for most of the early 1990s.The shake-up will virtually suspend the spectacular growth of international lending by Japanese banks, which swelled by 20 percent to 50 percent a year through most of the late 1980s and powered much of the world economy's expansion in those years.Its effects already are visible in the form of huge reductions in theJapanese purchases that helped to keep interest rates under control at U.S. Treasury auctions for much of the past decade.

Domestic role cited in run on pesoResidents of Mexico, not fleeing foreign investors, started the run on the Mexican peso that brought its collapse last year, according to an International Monetary Fund report."

SWALLOWING the bitter pills, South Korea's National Assembly yesterday enacted the stringent financial reforms that President-elect Kim Dae Jung opposed before his Dec. 18 election and now concedes to be necessary.As a result, a single regulatory agency will police banks, brokerages and insurance companies. The ceiling will rise on foreign ownership of firms. The central bank will have swifter power over interest rates. Subsidiaries of a conglomerate will no longer cross-fund each other's expansion.

TOKYO -- Two of Japan's most powerful financial institutions, the Bank of Tokyo and the Mitsubishi Bank, announced yesterday that they will merge, creating the world's largest bank.With about $819 billion in assets, the new bank would be about a third larger than the Sumitomo Bank, now the biggest with $604 billion, and more than three times the size of Citicorp, the largest in the United States.If the deal goes through, the new behemoth, tentatively called the Tokyo Mitsubishi Bank, would combine two of the strongest banks in Japan, where the banking industry has been shaken in recent years by the collapse of the country's stock and real estate markets.

TOKYO Japan's Finance Ministry has begun an investigation into whether Japanese brokerage houses intimidated two Japanese companies into canceling an agreement to issue new bonds through Salomon Brothers, an American brokerage with offices in Tokyo.The ministry's confirmation that the investigation is taking place out of the public eye appears to be a tacit acknowledgement of a discriminatory practice that the ministry has long said does not exist.The case has potentially broader implications, both for American efforts to obtain fairer competition in the Japanese financial markets and for the Finance Ministry's battle to keep other Japanese regulators out of its territory.

Sale of Wellcome PLC pushedWellcome PLC's largest shareholder said yesterday that it would press ahead with its plan to sell its 39.5 percent stake in the pharmaceutical company to Glaxo PLC, diminishing Wellcome's chances of evading Glaxo's $14 billion hostile takeover offer by attracting another bidder.To Wellcome, the decision was a continued if widely expected betrayal by the shareholder, the Wellcome Trust, a charity that until 1986 was the sole owner of the company.Wellcome was still left with some hope of finding an alternative buyer, because the trust can back out of its deal with Glaxo if a higher offer comes along within 21 days after Glaxo sends details of its offer to Wellcome's shareholders, probably next week.

TOKYO -- With all the strength of her 90 years, Chizuko Miyata clutched her crisp, cream-colored coupons and began dreaming of what she would buy with them."

TOKYO -- Japanese leaders agreed yesterday on a plan designed to restore the nation's debt-burdened banks to health, a crucial step to reviving growth in the world's second largest economy.The plan calls for a government takeover of some of the country's biggest and weakest banks, closing smaller institutions and pumping trillions of yen in taxpayer money into the banking system to dispose of bad loans.The prolonged debate over what to do about Japanese banks took on new urgency in recent months as it became clear that Japan's slumping economy -- now in its third quarter of contraction -- threatened growth around the world.

SWALLOWING the bitter pills, South Korea's National Assembly yesterday enacted the stringent financial reforms that President-elect Kim Dae Jung opposed before his Dec. 18 election and now concedes to be necessary.As a result, a single regulatory agency will police banks, brokerages and insurance companies. The ceiling will rise on foreign ownership of firms. The central bank will have swifter power over interest rates. Subsidiaries of a conglomerate will no longer cross-fund each other's expansion.

TOKYO -- Most of Japan's largest commercial banks yesterday reported their first net losses in five decades aswrite-offs of trillions of yen in bad loans wiped out record operating profits.The banks projected that aggregate profits through normal operations will plunge 34 percent this year to 2.305 trillion yen ($21.35 billion) as interest rates rise. That will jeopardize their efforts to rid themselves of the bad loans still spoiling their balance sheets."Last fiscal year was absolutely heaven for the banks," said Walter Altherr of Jardine Fleming Securities Ltd."

Domestic role cited in run on pesoResidents of Mexico, not fleeing foreign investors, started the run on the Mexican peso that brought its collapse last year, according to an International Monetary Fund report."

TOKYO -- Two of Japan's most powerful financial institutions, the Bank of Tokyo and the Mitsubishi Bank, announced yesterday that they will merge, creating the world's largest bank.With about $819 billion in assets, the new bank would be about a third larger than the Sumitomo Bank, now the biggest with $604 billion, and more than three times the size of Citicorp, the largest in the United States.If the deal goes through, the new behemoth, tentatively called the Tokyo Mitsubishi Bank, would combine two of the strongest banks in Japan, where the banking industry has been shaken in recent years by the collapse of the country's stock and real estate markets.

Tokyo -- What does the Tokyo Stock Exchange's 1992 plunge mean to Americans and others outside Japan?Almost since Tokyo's bear market began 27 months ago, Japanese and foreign analysts have warned that financial markets here would send out shock waves that would rock the rest of the world if the exchange ever fell much below half of its peak value in the booming 1980s "bubble economy."Most said the danger to foreign economies would lie somewhere under 20,000 points on the Nikkei 225, the most-watched Tokyo stock index.

TOKYO -- Japanese leaders agreed yesterday on a plan designed to restore the nation's debt-burdened banks to health, a crucial step to reviving growth in the world's second largest economy.The plan calls for a government takeover of some of the country's biggest and weakest banks, closing smaller institutions and pumping trillions of yen in taxpayer money into the banking system to dispose of bad loans.The prolonged debate over what to do about Japanese banks took on new urgency in recent months as it became clear that Japan's slumping economy -- now in its third quarter of contraction -- threatened growth around the world.

Sale of Wellcome PLC pushedWellcome PLC's largest shareholder said yesterday that it would press ahead with its plan to sell its 39.5 percent stake in the pharmaceutical company to Glaxo PLC, diminishing Wellcome's chances of evading Glaxo's $14 billion hostile takeover offer by attracting another bidder.To Wellcome, the decision was a continued if widely expected betrayal by the shareholder, the Wellcome Trust, a charity that until 1986 was the sole owner of the company.Wellcome was still left with some hope of finding an alternative buyer, because the trust can back out of its deal with Glaxo if a higher offer comes along within 21 days after Glaxo sends details of its offer to Wellcome's shareholders, probably next week.

TOKYO -- Faced with the worst economic slowdown since World War II and mounting evidence of deflation, the Japanese central bank cut its benchmark discount rate this morning to 1.75 percent from 2.50 percent.The reduction of the highly symbolic rate was hailed by government officials. Hiroshi Kumagai, head of the Ministry of International Trade and Industry, said the discount rate's cut to an historic low was appropriate given the economic problems.Following the announcement, stock prices rallied moderately on the Tokyo market, and the dollar strengthened, reversing the direction of yesterday's activity.