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Monday, February 23, 2009

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...


Baghdad Bob said...

All Your Banks Are Well Capitalized

Anonymous said...

Well there were some reports of Citibank employees in Asia selling their stock in Citi on Friday.
IIRC I saw a comment here on the ninja site back last summer (by an anonymous poster) that said this rot wouldn't be cleared until Citi had been dealt with, implying that Citi was deeply untrustworthy and un-credible...ya gotta wonder that if one got close enough to Citi in the spring of 2008,whether the sense of smell alone could have alerted one to the fact that you were standing close to a corpse.

dougiefreshhh said...

Just like the BearSterns guys...

Friday: "All is not panic."
Monday: "Uh sorry, we're broke".


Citi -
Friday: "All is well, do not panic"
Monday: "Uh, we might need some $$$, and a 71Billion yen loan just went south".


BofA -
Friday: "We are determined not to become nationalized"
Monday: TBD



Friday: "We will not nationalize banks."
Monday: "Uh..looks like Citi needs to be nationalized at the 40% level".

Next step - shut down the internet to stop e-trades and e-bankruns

Doug said...

Take them over, sell them off, and seize the assets of all top management and anyone who took a bonus in 2008.

Anonymous said...

What about AIG? Surely AIG will have blown whatever money they were given by being Long CITI ;-)

Anonymous said...

Isn't Citi King of Level 3 assets? I heard they have like $1 trillion in level 3. That's not gonna be fixed by a few billion here and there.

dougiefreshhh said...

Kevin Bacon even looks like Geitner!

Anonymous said...

Did somebody mention AIG?
They think Citi's onto something, by Jove...

fajensen said...

Hahahahahaha: The incompetence never stops, does it?

"David Lesher"
Sat, 21 Feb 2009 15:10:59 -0500 (EST)

"A Nigerian citizen duped Citibank into wiring $27 million to accounts that
he and others controlled, prosecutors said." Citibank accepted a package
changing contact data for the National Bank of Ethiopia; and only months
later noticed it came not from Ethiopia but Lagos, Nigeria. When they
finally started looking into it; they also found the new contact numbers
were cell phones in Nigeria, UK and South Africa.

I'm reminded of the ex-President who'd never seen a grocery store
scanner. An enormous international bank has never connected Nigeria and
identity fraud?

The Risk? Reliance on easily forged documents with no verification.

Sometimes, a fraud too simple to ever work, shall...

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