SFCG, Big Bankruptcy in Japan: Citigroup is Major Creditor

This should be interesting. Think about Citigroup and read carefully.

SFCG Goes Bankrupt With 338 Billion Yen Debt, Most in a Year: " SFCG Co., a Tokyo-based lender whose creditors include Citigroup Inc., collapsed in the biggest bankruptcy by a publicly traded Japanese company in more than a year, listing 338 billion yen ($3.6 billion) in liabilities.

SFCG, whose shareholders include Hikari Tsushin Inc. with an 11.5 percent stake as of Feb. 4, owes Citigroup 71 billion yen, according to a securities report filed by SFCG on Oct. 27. Shinsei Bank Ltd., owed 54.1 billion yen by SFCG as of July 31, led declines among Japanese lenders in Tokyo trading.

SFCG’s finances deteriorated because of difficulties obtaining credit and collecting on loans as the global financial crisis deepened, the company said in a statement today. Its shares, down 92 percent in the past year, will be delisted on March 24, according to the Tokyo Stock Exchange’s Web site.

A record 33 publicly traded companies in Japan declared bankruptcy last year as banks trimmed lending and consumers stopped spending money due to concern about jobs. Urban Corp., a Hiroshima-based developer, filed for protection with 255.8 billion in liabilities on Aug. 13, the biggest failure last year.

Overall corporate bankruptcies rose 15.8 percent to 1,360 cases in January, the eighth monthly increase.

Calls to Citigroup’s Tokyo office from Bloomberg News were not immediately returned."

Uh oh Citigroup. In the Citigroup, Bank of America: Prisoner's Dilemma, Electronic Bank Runs and Nationalization I wrote:

"Unfortunately there will be no angry mob lining up at the bank. Like Bear Stearns and Lehman Brothers, the run will be overnight, instant, electronic and leave no trace.When the tipping point is hit, the world at large won't know until AFTERWARDS.

Big money investors can't run the risk of waiting and hoping that everything will work out just fine. They find themselves in a Prisoner's Dilemma. Since they can't play nice as a team, they have to be first to act... and act they will. The first to panic wins."

Could some of the price action on Friday be explained by the pending bankruptcy of SFCG? Could it be that an electronic run on the bank has begun?

We can't know until the dust settles of course...