Japan Banks Loan Exposure to Lehman

123jump.com Staff
15 Sep, 2008
New York City

The financial regulator FSA in Japan ordered Lehman to retain assets at least equal to debt in the country. Separately, three banks in Japan have bank debt exposure of at least $750 million to Lehman. Over the weekend Lehman said that it intends to file for bankruptcy protection which was followed with a filing on Monday morning. Markets in Japan, China and Korea were closed.

[R]5:00AM New York, 7:00PM Tokyo- Japan orders Lehman to retain assets within Japan.[/R]

Stock markets in Tokyo, Hong Kong, mainland China and in Korea were closed today.

Japan Orders Lehman to Retain Assets in Japan

The financial regulators in Japan ordered Lehman to keep the assets that are equal to the size of its loan exposure within the country according to a report on the Web site of the Wall Street Journal. Lehman said today it will file for Chapter 11 bankruptcy protection.

Banking analysts estimate senior unsecured debt of Lehman Brothers might receive 60 cents to 80 cents on the dollar in the event of a bankruptcy filing. The troubled U.S. lender has an estimated $613 billion in outstanding liabilities, including about $149 billion of corporate bonds.

In addition, the company has about $60.2 billion in risky exposures as of the third quarter, including almost $50 billion of real estate exposure, most of which is related to commercial real estate, and $10.4 billion in acquisition finance exposure.

Although Lehman Brothers says it has filed for bankruptcy protection, Chapter 11 filing will not include its broker-dealer operations and other units such as Neuberger Berman.

The lender plans to sell its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.

British bank Barclays yesterday withdrew from talks to buy the lender after the U.S. did not grant loan loss provision. For the same reason Bank of America withdrew from the merger negotiations and later announced a deal to buy Merrill Lynch.

Japanese Banks, Lenders to Lehman

Several banks in Japan have exposure to Lehman according to the latest bankruptcy filing. Aozora bank has $463 million loan followe by Mizuho Corporate Bank with loans of $289 million and Shinsei Bank with a loan of undetermined amount.