New boys' challenge

Article Abstract:

Indonesia's new cabinet members include several new faces who represent a bold move away from a technocratic approach toward Minister for Research and Technology Bachruddin Habibie's economic nationalism. The greatest challenge for Coordinating Minister for Economy and Finance Saleh Affif, Finance Minister Mar'ie Muhammad and central bank Gov Sudradjat Djiwandono will be to restore confidence in the failing bank system. Local and foreign creditors were scared by the collapse of Bank Summa. Both private and state owned banks have been forced to raise interest rates to fight heavy defaults on debts.

Cover Story, Economic policy, Indonesia

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How could you? Japanese banks had high exposure to Barings

Article Abstract:

The practice among Japanese banks and government institutions of lending bonds to foreign brokerages without collateral helped make the collapse of Barings PLC possible. The market is unregulated, and may amount to 20 trillion yen ($217 billion). It pays the lender poorly compared to the risk involved. Japan is the only country with such a market on that scale. Now Japanese lenders are more cautious of foreign borrowers and have already slashed many credit lines, even of longtime customers.

International aspects, Derivatives (Financial instruments), Securities industry, Barings PLC

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Charity begins at home

Article Abstract:

The Bank of China's mandate for a syndicated loan from the Bank of Tokyo has met with a lukewarm response due to the recession in the Japanese economy. Moreover, the Bank of China failed to provide any information on the eventual use of the loan money and the prices offered were high. Japanese bankers therefore feel that any loans to China should be based on economic rather than political considerations.

Investments, Bank investments, Bank of China, Bank loans, Bank of Tokyo (Egypt)

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