Troubled Yamaichi May Close

TOKYO — One of Japan’s biggest securities firms plans to shut down because of financial woes from a payoff scandal and a slump in Tokyo stock prices, Japanese news services reported.

Yamaichi Securities Co., which has debts of about 3 trillion yen, or $24 billion, would be the biggest Japanese company to collapse since World War II, Nikkei News said late Friday.

But Japanese Finance Ministry officials said Saturday that Yamaichi had not decided if it would apply to the ministry to shut down its operations--the equivalent of filing for bankruptcy.

Atsushi Nagano, head of the ministry’s securities office, said Yamaichi’s financial condition is serious, but it remains solvent. He said the firm will decide by Tuesday whether to remain open. Monday is a national holiday in Japan.

The failure of Yamaichi would be the latest blow to the troubled Japanese financial world, which has been buffeted in recent years by the collapse of the 1980s’ “bubble economy” of real estate speculation and excessive lending.

Earlier this month, Sanyo Securities Co., a medium-sized Japanese brokerage, went bankrupt after failing to repay mounting debts.

Concern about the stability of Japan’s banks has been rising, and the administration of Prime Minister Ryutaro Hashimoto is considering a massive government bailout to save the banks from failure.

In its report, Nikkei said the Bank of Japan, the central bank, will extend special loans to protect the assets of Yamaichi’s customers.

Yamaichi has seen its stock price severely battered in recent weeks amid concerns over its financial health. On Thursday, it asked for financial help from Fuji Bank Ltd., one of Japan’s biggest banks.

Nikkei said Yamaichi had also been trying to obtain a cash infusion from various foreign financial companies but had failed. Earlier this week its share price fell below 100 yen (79 cents), a level believed by market analysts to indicate near-collapse.

The report by Nikkei was carried by Dow Jones News Service. A telephone call seeking comment from Yamaichi’s U.S. arm in New York was not immediately returned.

On Friday, Moody’s Investors Service downgraded Yamaichi’s debt to junk-bond status. Lower credit ratings often make it more expensive for companies to borrow money.

Moody’s said Yamaichi has been hampered by “continued loss of market share and persistent rumors about payment scandal” and drained by efforts to keep its real estate lending affiliates afloat.

Standard & Poor’s also lowered its rating on Yamaichi to junk status, based on the reports of its decision to close.

Along with Japan’s other “Big Four” brokerages, Yamaichi has been embroiled in a payoff scandal, which led to the arrests of its former president and five other executives.

The firm was accused of making illegal payoffs to corporate racketeers who threatened to disrupt shareholder meetings if not paid off in advance. The other brokerages involved in the scandal included Nomura Securities, Daiwa Securities and Nikko Securities.

Last month, Yamaichi reported a loss of 8 billion yen, or $63 million, for the six-month period ending Sept. 30. The company cited poor results on sales of Japanese equities, especially in Europe, and continued weakness in the Tokyo stock market.

Yamaichi officials had said the company was considering a broad restructuring plan, including splitting its business operations into three entities and cutting 2,500 to 5,000 employees by March 2000.