Bank consolidation, Japanese style

[Charles Jannuzi]

Just thought I'd follow up on this a bit.


>>http://www.yomiuri.co.jp/02/20020717i203.htm

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If you don't have the ability to display Japanese
this will look like nonsense above. But basically
what the Yomiuri story says is that Aozora Bank
has announced a new service as a way around the
caps on deposit insurance (on time deposits--btw,
there have been calls in the Diet for the
government to back off from putting the same 10
million yen cap on regular and daily draft
accounts, a bank reform due to take effect next
year). The service works like this: you put your
cash with Aozora and Aozora then breaks it up
into insured chunks and place them in time
deposits with regional and second tier banks that
agree to work with Aozora. So, for example, if
you had 100 million yen, Aozora might break it up
into ten lump sums and place it with ten
different banks. This would be rather
time-consuming to do yourself, so Aozora is
offering to do it for you. I suppose it might
allow for a bit of competitive shopping for
interest rates, but really, they all read like
.015% annual return. 

Aozora is the re-established Japan Credit
Bank--the one Softbank wants to sell it's share
of, the one that private equity groups like the
US's Cerberus (you are at the gates of vulture
capital hell) want to control.

Meanwhile Japan is being pressed with calls to
consolidate all the little banks and credit
unions into something that the big banks might
want to buy up later. And it's also being pressed
to admit that the big banks in Japan can't meet
capital adequacy ratios of 8%--but then again,
that depends who gets to define what is and what
is not a 'bad' loan. 

CJ

 

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