Bank Lending In Japan Expands, JAL Bankruptcy

Darlington Musarurwa
12 Jan, 2010
New York City

Prime Minister Hatoyama urged JAL retirees to approve the restructuring plan ahead of deadline. The troubled carrier is expected to file bankruptcy and take up to three years to turnaround. Current account surplus soars in November. Bank lending increased 1.2% in December and 2.5% in 2009.

[R]5:00 AM New York, 7:00 PM Tokyo – Prime Minister Hatoyama urged JAL retirees to approve the restructuring plan ahead of deadline. The troubled carrier is expected to file bankruptcy and take up to three years to turnaround. Current account surplus soars in November. Bank lending increased 1.2% in December and 2.5% in 2009.[/R]

Japanese market averages closed higher after China reported a surge in imports and the dollar hovered near its recent levels. Bank lending in 2009 increased 2.5% and current account surplus soars in November.

In Tokyo trading Nikkei 225 Stock Average increased 0.8% or 80.82 to 10,879.14, and the broader Topix Index rose 1.4% to 954.13.

In the first section of the Tokyo Stock Exchange 11.9 billion shares valued at 756 billion yen were traded and in the second section 153 million shares worth 1.5 billion yen changed hands.

Of the Nikkei 225 index stocks, 150 gained, 60 dropped, and 15 were unchanged. Okuma Corp. led gainers in the index shares with a rise of 6.7% followed by IHI Corp. increasing 6.5%.

JAL Restructuring Talks Progress

Nikkei News reported today that Japan’s transport minister Seiji Maehara held a meeting with the executives of JAL’s commercial creditor banks, Mizuho Corporate Bank, Sumitomo Mitsui Financial Group, Mitsubishi UFJ, who tentatively approved government’s court led rehabilitation program.

The state-owned Development Bank of Japan, JAL''s biggest creditor bank, had already agreed to the bankruptcy option.

Prime Minister Yukio Hatoyama said delisting of the carrier may be inevitable during the restructuring process.

State-backed Enterprise Turnaround Initiative Corp. of Japan noted delisting JAL’s shares will help clarify shareholder responsibility by seeking retirement by the company of 100% of its common shares.

Hayotama also urged retirees of the airline to approve the slash in pension benefits ahead of the Tuesday deadline to receive approval from two-thirds of the 9,000 retirees.

Separately, American Air and TPG raised its offer to invest in the airline to $1.4 billion.

Current Account Surplus Rises 76.9%

Japan’s finance ministry reported today the country’s current account surplus in November gained 76.9% to 1.1 trillion yen on growing exports to other Asian countries.

Balance of trade in goods and services posted a surplus of 439.5 billion yen from 142 billion yen a year earlier.

The surplus in merchandise trade stood at 490.6 billion yen from a deficit of 92.2 billion yen in the comparable year ago period.

Exports decreased 7% to 4.7 trillion yen, falling for the 14th consecutive month.

Bank Lending Rise 2.5% in 2009

Bank of Japan reported today the average balance of bank lending rose 2.5% to 404 trillion yen in 2009, rising for the fourth consecutive month.

Average daily balance of bank loans soared to 404.2 trillion as of December.

According to the report, lending, excluding loans by credit associations, dropped 1.2% to 402 trillion yen in December from a year ago.

The average lending balance at city banks -- including major banks and trust banks -- dropped 3.1% to mark the second straight fall.

Nikkei Movers

Japan Airlines Corporation led the decliners in the Nikkei 225 Stock Average with a loss of 45.5% followed by losses in Fast Retailing Co Ltd of 5.0%, in Trend Micro Incorporated of 2.8%, in Panasonic Electric Works Co., Ltd 2.5% and in Taiheiyo Cement Corporation 2.5%.

Okuma Corp led gainers in the Nikkei 225 Stock Average with a rise of 6.7% followed by gains in IHI Corporation 6.5%, in Kubota Corp of 6.0% and in Hitachi, Ltd of 5.7%.

Other Movers

All Nippon Airways Co., Ltd the carrier climbed 4.2% to ¥295.00.

Hitachi, Ltd gained 2.0% to ¥296.00.

Japan Airlines Corporation plunged 44.7% to ¥37.00 after the provision of air transport services will cut 15,600 jobs one third of its workforce and reject investment from two U.S. carriers. The troubled carrier is expected to file bankruptcy as early as next week and take up to three years to turnaround the airline.

Mitsubishi Corporation added 1.9% to ¥2,478.00 after the trading company said that the U.S. International Trade Commission that it found no violation of General Electric wind turbine patents by Mitsubishi Heavy Industries Ltd, and it terminated its investigation.

Sumitomo Metal Industries, Ltd advanced 5.6% to ¥282.00.

Toshiba Corp rose 0.9% to ¥543.00 and PC maker said it is planning to focus on fast growing in personal computer and note book market in India.