Questionable signal

Article Abstract:

The merger of Long-Term Credit Bank of Japan (LTCB) and Sumitomo Trust & Banking will be a test case for the reform of Japan's banking industry. The element of uncertainty in this deal lies in the creation of a 'bridge bank' that would take over LTCB's loans to unreliable borrowers. This bank will ensure that risky borrowers do not collapse, but this approach could bring significant costs. Losses may accumulate, and taxpayers may eventually face a very heavy burden.

Japan, Laws, regulations and rules, Mergers, acquisitions and divestments, Economic policy, Sumitomo Trust and Banking Company Ltd., Long-Term Credit Bank of Japan

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Cashing out

Article Abstract:

The restructuring of the South Korean financial sector has begun with the decision by the government that five banks in difficulties should be taken over by stronger banks. However, some observers have claimed that South Korea is not dealing sufficiently aggressively with its banking problems by failing to liquidate these banks outright. There is a danger that merging problem banks with stronger ones could create even larger problem banks.

South Korea

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