By Chinese media Writer Qi Wei
TOKYO, Sept. 18 (Chinese media) -- Lehman Brothers, a
158-year-old investment bank which has been choked by the credit crisis and
falling real estate values, collapsed Monday after British bank Barclays PLC
withdrew its bid to buy the investment bank, sending troubles to a broad range
of financial institutions and the global economy. As the world's second largest
economy, Japan is expected to be one of the surest victims.
The ripple of the
Lehman-triggered turmoil seems to spread to the financial sector as well as the
stock and foreign exchange market in Japan.
FINANCIAL INSTITUTIONS TO
BE BADLY STRUCK
Japan's financial sector is bracing itself for the
bankruptcy of the investment bank as eight major banking groups own a combined
320 billion yen (3.05 billion U.S. dollars) in bonds or loans tied to the Lehman
Brothers. And more than 40 percent, or some 140 billion yen (1.33 billion
dollars) of the total amount, is not secured with collateral or other means.
Take the Sumitomo Mitsui Financial Group for example.
The banking group forecast a loss of about 10 billion yen (95.24 million
dollars) out of the 103 billion yen (981 million dollars) in bonds or loans
linked to the Lehman Brothers. Things seem to be even worse for the Mizuho
Financial Group. The bank is projected to incur a loss of about 20 billion yen
(190.48 million dollars) ,accounting for half of the 40 billion yen (381 million
dollars) it holds in bonds or loans.
Japan's banks and insurers expect a total of 245
billion yen (2.33 billion dollars) of potential losses from the collapse of
Lehman, Bloomberg reported.
Regional financial institutions are also easy prey
for the turbulence brought by Lehman's failure as thirty regional banks possess
61 billion yen (581 million dollars) in its bonds or loans. In addition, there
are 195 billion yen (1.86 billion dollars) of Lehman-issued smurai bonds
circulating in Japan.
Should the Lehman Brothers
default on its debts, the impact on the Japanese financial sector would be
catastrophic.
TOKYO STOCKS HIT NEW
LOW
Japanese financial markets were closed Monday for a
national holiday, when the fourth-largest U.S. investment bank filed for
bankruptcy.
Tokyo stocks, however, nosedived nearly 5 percent on
Tuesday to hit a new low in more than three years amid mounting concerns over a
global financial turmoil after the Lehman Brothers collapsed. The benchmark
Nikkei Average plummeted 605.04 points to 11,609.72 points, its lowest closing
level since July 8, 2005, when it finished at 11,565.99.
Though the Nikkei index went up 1.21 percent to
11,749.79 points on Wednesday, the rebound proved to be short-lived as the
general downtrend for the Tokyo market returned Thursday. The Nikkei index
plunged 260.49 points, or 2.22 percent to close at 11,489.30.
Meanwhile, the Tokyo foreign exchange market also
suffered a slump Tuesday when the U.S. dollar dived to the 103 yen range from
the 107 yen level Friday, hitting a nearly four-month low amid fears of a
financial crisis.
Though the dollar regained ground through Thursday's
5 p.m. quote of 105.18-21 yen, it still takes time for the dollar to restore to
the normal level when the gloomy financial outlook makes many currency market
watchers remain skeptical about the strength of the dollar.
And the appreciation of yen
against the dollar could be easily felt by Japan's export-oriented
enterprises.
MEASURES ADOPTED TO
TACKLE FALLOUT OF LEHMAN'S COLLAPSE
As financial institutions competed with each other
for cash and pushed unsecured overnight call money rates well above the central
bank's official target of around 0.5 percent, the Bank of Japan (BOJ) on
Thursday poured 2.5 trillion yen (23.9 billion dollars) into Tokyo's money
market to regulate the market in short-term finance between banks and other
financial institutions.
The input of the money came for a third straight day
of emergency operation following two previous day's injection of 2.5 trillion
yen and 2 trillion yen (19.05 billion dollars) respectively, bringing the
aggregate amount of emergency to 8 trillion yen (76.2 billion dollars).
Earlier Thursday, Economic and Fiscal Policy Minister
Kaoru Yosano extended Japan's willingness to work with the U.S. and EU financial
authorities to address the global financial market turmoil after exchanging
views with leading figures of Japan's business and financial communities over
the impact of global financial chaos on Japan's economy.
As the problems the U.S. financial system is faced
with cannot be solved overnight and the restoration of order in the financial
market takes time, Japan is ready to offer every possible coordination, he said.
Later in the day, six central banks such as the BOJ,
the U.S. Federal Reserve and the European Central Bank decided to take
coordinated measures to mitigate the negative effect exerted by the current
turmoil in the global financial market.
As part of the measures, the BOJ has concluded a
currency swap deal worth 60 billion dollars with the Fed to provide dollar funds
to Japan's worst-hit financial institutions.
To better cope with the grave financial situation,
the BOJ convened an extraordinary meeting of its policy board members Thursday
to deliberate on its monetary policy again, and upheld its Wednesday's decision
to retain the benchmark interest rate unchanged at 0.5
percent.
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