Takefuji, Third Largest Japanese Consumer Lender, Halted, To File Bankruptcy
Takefuji Corp., the third largest Japanese consumer lender, was limit down on the Nikkei, and was subsequently halted, on reports the company is preparing to file bankruptcy as reported by Nikkei newspaper earlier. The news was also confirmed by the Jiji and Kyodo news agencies. According to Reuters, "Takefuji had 430 billion yen ($5.11 billion) in liabilities as of the end of June, the Nikkei business daily reported, adding that president Akira Kiyokawa would step down." Apparently the reason is that according to Japanese "consumer protection" banks are limited to the paltry 20% they can charge for interest: "Japanese consumer lenders have been struggling to cope with regulations lowering the rates they can charge on loans as well as claims for reimbursement for past interest deemed illegally high by a court ruling in 2006. In June a new set of regulations cemented the interest rate ceiling at 20 percent, down from 29.2 percent, and limited the amount an individual can borrow." Nonetheless, the filing will likely not be a major surprise as even Moody's appears to have been on the case.
The company had $404.6 million of debts as of March [not sure how this confirm with the previous number which had the debt at about 1,000 times higher], the company said in July. Moody’s Investors Service in that month cut Takefuji’s credit rating to Ca, the second-lowest non- investment grade rating, citing its funding plans and borrowers’ claims for repayment of overcharged interest. Net income sank 32 percent to 6.3 billion yen in the three months ended June 30, from 9.3 billion yen a year earlier.
This should be a stark reminder of what happens to a financial industry which is faced with a deleveraging consumer class, coupled with an overzealous consumer protection regulator.
And just because every major media outlet in America appears to have gotten a memo to not mention the fact that America's wholesale drecit unions, we will make sure that everyone remembers all too well on Monday morning, that about 10 times the debt of Takefuji just went bankrupt in our own country last week.