Yamaichi Securities and its sister companies jumped to the aid of a troubled affiliate, Kyoritsu Securities, yesterday.
Analysts in Tokyo said the rescue illustrated the imminent disaster facing many, if not most, Japanese securities companies.
To rescue Kyoritsu from dissolution, Yamaichi companies bought a one billion yen (about HK$65.16 million) sub-ordinated bond it issued, a Yamaichi spokesperson said.
The money will be used to keep Kyoritsu's capital adequacy ratio above the lower limit set by Japan's Ministry of Finance. This is the second time Kyoritsu, one of Japan's top 48 securities companies, has been rescued this year by Yamaichi.
Yamaichi this month also donated precious cash to Daichu, another money losing affiliated securities company. A third Yamaichi affiliate, Ogawa Securities, became the first securities company bankruptcy in 17 years this May after repeated rescue efforts were called off.
Yamaichi itself lost 163 billion yen in the fiscal year that ended in March. The losses came before Yamaichi became involved in a scandal involving alleged illegal pay-offs to a known racketeer. If Yamaichi officials are found guilty it may suffer the same fate as Nomura Securities.
Nomura's share of Japan's securities trading has dropped from 11 per cent last year to less than 3 per cent in recent months after the scandal led investors to shun it. As of March 1997, Yamaichi, one of Japan's 'big four' securities companies, had a capital adequacy ratio of 240 per cent, leaving it only moderately above the 200-per cent limit at which the Finance Ministry requires drastic remedial action, the analysts said.
