In Japan, the Prime Minister, Ryutaro Hashimoto, finds himself under renewed pressure to bail out the country's debt-laden financial sector after reports that one of the country's biggest securities houses is about to declare bankruptcy.
In South Korea, President Kim Young Sam yesterday warned the nation to anticipate "bone-carving pain" after the collapse of the currency forced his government to seek a humiliating rescue from the International Monetary Fund.
Executives of Yamaichi Securities spent yesterday in meetings after reports the company was about to shut down. While declining to confirm this, the company admitted bankruptcy was possible after its main creditor, Fuji Bank, refused to rescue it from 200bn yen (pounds 926m) debts.
"Our board members are doing their best to seek a final conclusion, including a possible shutdown of our business," said the company, which will announce its decision tomorrow. If Yamaichi does go under, it will be the biggest business failure in Japan since the war, and a further blow to a paralysed economy.
The executive director of the Bank of Japan, Tadayo Homma, promised assets of Yamaichi customers would be protected, but stopped short of describing measures. "Stability of markets inside and outside is important," he said.
But without an unequivocal promise of cash from the government, it will be another choppy week in Tokyo, where several banks are believed to be close to insolvency after the decline in share prices reduced the value of their assets. An uncontrolled market collapsecould have disastrous effects worldwide, as panic-stricken Japanese companies withdraw funds from overseas markets.Even relatively healthy Japanese institutions are finding it difficult to borrow abroad, with lenders imposing a "Japan premium".
Shares fell 4 per cent on the Seoul Stock Exchange yesterday, despite the announcement late on Friday that the country has asked the IMF to provide loans of $20bn for its failing banks. The IMF is expected to insist on strict fiscal discipline as a condition of assistance, bringing with it bankruptcies of weak companies.
In a national address Mr Kim called on Koreans to "give up vested interest" in the pursuit of common prosperity. "Democracy and the national economy can only grow when there is a spirit of self-sacrifice," he said. "Now is the time for all of us to tide over the crisis by tightening our belts once again and sharing pain ... The structural readjustment of the economy is bound to trigger bone-carving pain for all the main economic players."
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- Economic Rescue Package
- International Monetary Fund
- Loans And Lending Market
- South Korea