Today is a national holiday in Japan, but authorities clearly intend to head off any jitters that could hit Wall Street or the Tokyo markets that reopen Tuesday. Prime Minister Ryutaro Hashimoto, on his way to the Asia-Pacific Economic Cooperation summit meeting in Vancouver, Canada, said today that he had instructed the Finance Ministry to take measures to maintain stability in the financial system.
However, the real extent of Yamaichi's problems is still emerging. Mitsuzuka, the finance minister, said today that Yamaichi's hidden debt could amount to an additional $2.1 billion, while the Japanese media reported that the real figure could be even higher. The brokerage is suspected of engaging in tobashi, the practice of illegally compensating favored clients for their losses.
The Asahi newspaper reported today that Yamaichi had set up offshore paper companies, including one in the Cayman Islands, in order to conceal its tobashi debt from Finance Ministry regulators. Mitsuzuka said he had learned of the off-the-books debt only last week.
Yamaichi is estimated to have handled between 4% and 6% of all Japanese securities transactions. Its rivals--including U.S. firms Goldman Sachs and Merrill Lynch, which have been eating away at its business for months--will begin scrambling to grab as much of that market share as possible.
"In order for there to be winners, we need the losers to actually drop out of the race," Koll said. "This bankruptcy underscores the opportunity that is created by Big Bang."
Etsuko Kawase in The Times' Tokyo Bureau contributed to this report.