Another Japanese bank goes under - "more shakeups to come"

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Saturday August 7, 4:34 am Eastern Time

Japan's regional Namihaya Bank declared insolvent

TOKYO, Aug 7 (Reuters) - Saddled with overwhelming debt, Osaka regional Namihaya Bank Ltd on Saturday became the latest bank to be declared bankrupt and placed under government protection.

The Japanese banking regulator, the Financial Reconstruction Commission (FRC), declared Namihaya bankrupt a day after the bank filed for emergency assistance.

Namihaya Bank became the sixth bank to placed under government protection under new banking laws enacted last year to promote stability in the financial sector.

It became the fourth second-tier regional bank to be declared insolvent since April.

The western Japan city of Osaka has been one of regions hardest hit by the recession. In May regional competitor Kofuku Bank was declared bankrupt and placed under state protection.

The FRC had two main options for dealing with failed banks such as Namihaya -- appoint a receiver and set up a bridge bank to operate it until a buyer was found, or nationalise the bank while its operations were wound down.

The Bank of Japan can provide emergency loans to protect depositors.

The steps are based on financial reform legislation passed last year to heal the ailing banking sector, burdened with massive bad loans from the early 1990s when Japan's ``bubble'' economy burst.

Under the law, bank failures have become more commonplace in Japan as an increasing number of financial institutions find it impossible to dig themselves out from the debt they accumulated during the bubble economy when land prices plummeted and hundreds of billions of dollars in loans went sour.

Namihaya Bank president Shinji Yoshida told a news conference on Friday that the bank expected to report 110 billion yen ($956.5 million) in excess liabilities as of the end of September.

Yoshida also said that about 160 billion yen in deposits had been withdrawn from Namihaya accounts since the end of May amid persistent worries over its financial health.

Namihaya had 2,349 employees and 114 domestic branches as of the end of March.

Namihaya's share price on the Osaka Securities Exchange has fallen more than 80 percent since January 5, when it peaked at 268,000 yen.

The shares were ask-only throughout the Friday session at 44,000 yen, compared with Thursday's close of 47,000 yen, and the bank will likely be delisted from the bourse following the example of other banks that were delisted after being placed under government protection.

The series of failures is expected to herald more shakeups to come among regional banks, which remain burdened by massive non-performing assets.

-- a (a@a.a), August 09, 1999

Answers

Let 'em ALL go under!!! In January, maybe this WHOLE free trade nonsense goes away like a bad dream!



-- K. Stevens (kstevens@It's ALL going away in January.com), August 09, 1999.


--snip..Yoshida also said that about 160 billion yen in deposits had been withdrawn from Namihaya accounts since the end of May amid persistent worries over its financial health.--end....... Some got their money out.

-- kevin (innxxs@yahoo.com), August 09, 1999.

YEN and the art of BANK Maintenence

-- Living in (THE@REAL.WORLD), August 09, 1999.

For the LAST time, get the hell out of the market NOW!!!!!!!!!!

-- FLAME AWAY (BLehman202@aol.com), August 09, 1999.

They know how to build great cars, but their accounting leaves something to be desired.

-- Gia (laureltree7@hotmail.com), August 09, 1999.


If the Bank of Japan tanks, it's over, isn't it, a?

-- Randolph (dinosaur@williams-net.com), August 09, 1999.

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