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Wednesday, November 26, 1997 Published at 14:46 GMT


Japan says 'no more bankruptcies'
image: [ Tokuyo Bank executives apologise for the closure ]
Tokuyo Bank executives apologise for the closure

Senior government and finance officials in Japan have appealed for calm among the public and money markets.

A rare joint statement by Finance Minister Hiroshi Mitsuzuka and Bank of Japan governor Yasuo Matsushita, also promised there were no more major bankruptcies among financial institutions ahead for the nation.

[ image: Finance Minister Hiroshi Mitsuzuka]
Finance Minister Hiroshi Mitsuzuka
In a sign of how the closure of four financial institutions, including two in the past three days, has rattled the public, the statement said people were withdrawing their deposits from banks.

The rush of customers to withdraw money from the failed brokerage Yamaichi Securities overloaded its computer, forcing some to wait.

Almost $4bn was withdrawn from accounts and the company had to turn away some people who demanded immediate cash payments early in the day.

The joint statement urged the public to have faith in Japan's financial system and ignore irresponsible rumours.

Mitsuzuka and Sakakibara acted after Japan went through more financial pain on Wednesday over the collapse of a small regional bank, Tokuyo City Bank, two days after Yamaichi started liquidating.

[ image: A trader shows signs of the turmoil]
A trader shows signs of the turmoil
Against the trend, the Tokyo stock market's key 225-share Nikkei index rose, buoyed by hopes that politicians were moving towards deciding on the controversial step of using public funds to help clean up the financial sector's mess.

The Nikkei closed up 1.12 percent or 178.02 points at 16,045.55 after falling more than 5% on Tuesday.

There was more gloom when Moody's Investors Service said it was looking at downgrading credit ratings of five banks:

Long-Term Credit Bank of Japan Ltd, Nippon Credit Bank Ltd, Mitsui Trust & Banking Co Ltd, Yasuda Trust & Banking Co Ltd and Chuo Trust & Banking Co Ltd.

The economic fundamentals of the five banks were very weak, the rating agency said.

Prime Minister Ryutaro Hashimoto, at the APEC summit in Vancouver, did his bit to try to restore order and confidence in the world's second-largest economy saying the government was in control of the situation.

"We are not so conceited that we would think that we can be the locomotive for the Asia-Pacific region,` he told a news conference.

Japan's financial troubles weighed heavily on Asian regional currencies on Wednesday as the yen looked poised again to test five-year lows.

Former Daiwa bosses charged

Japanese prosecutors on Wednesday formally charged former executives of Daiwa Securities for their alleged payoffs to corporate racketeers, wrapping up a chapter in a financial scandal which has ensnared Japan's top brokerages.

Prosecutors indicted former vice president Hiromitsu Sogame and two other former executives on suspicion of authorising the brokerage's improper payments to "sokaiya" racketeer Ryuichi Koike, already under arrest for related charges.

With the latest actions, senior officials of all the "Big Four" brokerages have been charged.

European markets

European shares held steady following fresh reassurances by Japan that the government will do its utmost to avert a financial system crisis and the yen pulled back from the brink in nervous trade.

Bullion markets saw gold slump further to touch a 12-1/2 year low, while zinc and lead came under pressure before rallying on the London Metals Exchange.

Britain's FTSE 100 index of leading shares was trading close to its highs for the day by midmorning.

Shares in Frankfurt and Paris also rallied after a dull performance on Tuesday.

Enver Solomon reports from Tokyo

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