The Toyo Shinkin forged-certificate affair and the ¥240bn to a restaurant proprietor (1991)

When funding and lending meet in a single customer

To IBJ, Onoue Nui was not first of all an individual running a restaurant; she was a large client holding ¥290 billion of discount debentures. Someone who buys financial debentures in that volume is, to IBJ, a supplier of funds. If she then borrows against that same paper, the identical person becomes a user of funds as well. When supplier and user converge in one customer, credit scrutiny tends to dull. In a period when corporate borrowers were deserting the banks and the loan book was thinning, letting go of such a counterparty was a hard call to make.

A Bank of Japan survey of lending in the summer of 1990 already carried an entry reading “Keigawa, ¥400 billion.” The anomaly was visible from outside, and more than a year passed with it in view. A relationship in which the bank's president called at the restaurant to pay his respects was likewise built by a logic other than credit assessment. That the bankruptcy trustee spent ten years recovering ¥17 billion shows the lender's responsibility was recognised in a court of law. However well the corporate flight from bank borrowing explains the structural pressure, the figure of ¥240 billion was set by IBJ.