Lehman Brothers Trouble in Japan

NHK World: Lehman Japan affiliates owe $37.5 bil.

Two Japanese affiliates of the failed US investment bank Lehman Brothers say they have combined debts totaling more than 3.9 trillion yen, or about 37.5 billion dollars. The president of Lehman Brothers Japan, Akio Katsuragi, made the announcement at a news conference after his company and Lehman Brothers Holdings filed for court protection from creditors on Tuesday.

The Bank of Japan has done what is called "emergency injections" into the short-term money market totaling about 60 billion dollars since Monday. That's my tax yen and yours helping rich people stay rich. Or is it their way of avoiding the end-of-the-world-as-we-know-it?

NHK World: Japanese lenders' Lehman exposure limited

Japanese financial institutions say they hold more than 400 billion yen, or 3.8 billion dollars, worth of investments and loans in failed securities house Lehman Brothers.

42 of Japan's financial institutions including major commercial and regional banks, and insurance companies disclosed their exposure to Lehman on Tuesday.

Sumitomo-Mitsui Financial Group reported that it holds about 980 million dollars in investments and loans, of which 96 million dollars' worth could generate losses.

Mizuho Financial Group says one-half of its 380 million dollar exposure, and Aozora Bank one-fifth of its 570 million dollar credit could be written off.

Regional banks say they own up to 67 million dollars in Lehman Brothers' corporate bonds at risk of default. Insurance firms are also among Lehman's creditors.

The financial institutions say their losses are likely to be limited because most of their investments and loans are secured with collateral.

The NHK World spin here is that the exposures are "limited". OK, so they have some dandy "collateral" meaning they probably will start to have to cash in on skyscrapers here and there, so noone is too worried. The Financial Times seems to agree. But why did all these fine Japanese banks invest in a company like Lehman Brothers? Well, just last year, in 2007, Lehman Brothers ranked number one as "Most Admired Securities Firm" by Fortune, the US magazine. Any ideas, dear readers? I am certainly at a loss.

As an aside, I checked Lehman Brother's "Sustainability Principles". This is where a company gets to brag about all the good things they do for society. How did they feel about environmental issues and corporate social responsibility? They noted that they believe in "market based solutions":

Market-based solutions – We believe that market-based solutions can deliver commercially feasible environmental and social benefit. We will apply our knowledge and understanding of financial markets to develop and implement innovative environmental and social market-based solutions

http://www.lehman.com/who/sustainability/

(Accessed 080914)

Well, they got "market-based solutions" all right: the US government refused to bail them out. Lesson learnt, hopefully.