Herbie goes east

Okura Hotel,
Tokyo, Japan

How do you buy a small Japanese bank, yes, yes, you buy a big one and wait, except that this is Japan so the waiting comes first and can go on for ever, which is why I hole up in the Okura with nothing to do but watch my check mount up until it goes right off the dial.

I am set up for this by my poor friend from the Fugu Fish Bank of Hokkaido when we are in Liverpool Street Station, putting on the moshi moshi sushi, which goes down very nicely, at that, and seems to cheer him up, he lives in a perpetual state of fear that his bank finds out he goes native in London and recalls him to head office, I know the feeling myself.

It seems how back home in Sapporo, times are hard for his bank, some of its assets are underperforming, in fact they stop performing seven years ago and leave the theatre and the management begins to wonder if they plan on coming back, and at much the same time all the capital gets to be invested in customers' stocks, which counts as being supportive but is not exactly what the BIS intends.

By now the price of money in Japan gets down to 50 basis points with no takers, so the Fugu Fish lenders look farther afield, like in the Philippines they finance jitney loans and in Malaysia they're into dams and in Thailand it's real estate and customized personal services, and all these guys borrow in yen and are now struggling to repay in wooden nickels.

So the search is on for someone to blame, and my friend gets blamed on account he is a long way away, and also for the premium he pays over Libor, which results in a loss of face, tho' nowadays he only borrows to roll over what he lends to Eurotunnel, and once this loan gets converted into stock and the stock price trebles he is close to breaking even.

Over the sushi he puts out a feeler to me, he goes on about global markets and the free flow of investment, and explains how Sapporo is the Boot Hill of Japan, which means our two banks have natural synergies and now is the time to exploit them, so maybe the heaven-born warriors in the MoF relax and permit it.

At this I tell myself: wow, maybe I find the sucker who is ready to buy Hillboot Intergalactic, our investment bank, or at least the slice of it I put up for sale along with Holey Buckett, I tell Holey to find buyers but he does not seem in any hurry, all he does is call and tell me who drops out, maybe his contract is the sticking point.

After all, IBJ buys Schroder Bancorp in New York and the Bank of Yokohama has its own accepting house in London, where my friend the billbroker works, so why not Panuniversal Fugu, there are worse things my friend can do with his money and probably he does them all already, I wonder if his bank still has a tin box full of T-bonds.

I try this on him kinda gently but he chokes, for a moment I figure he bites on a fugu fish sushi but it turns out his saké goes down the wrong way, he confides how the tin box long since leaves the vaults in Sapporo and nests in some creditor's vault, in fact, so far from buying Intergalactic, he cannot even buy lunch.

What he means to say in his indirect Japanese style is how if his bank goes on, someone must top up its capital, and howsabout this being us, up to now the MoF makes sure Japan's home market is reserved for the Japanese, and a deep black hole it turns out to be for them, so now if the choice is between finding zillions of yen for them or letting gaijins do it, this may be the gaijins' chance.

Mom, this idea is so crazy I like it, can this be the second half of our seamless transition, out of investment banking at the top, someone else can pay Holey his bonuses, back into bread and butter moneylending, with margins bigger than a basis point and earnings that do not turn negative whenever some options trader gets his smile the wrong way up.

I see Boot Hill Fugu unfolding before me, a true regional bank with its roots in its branches, seasonal financing for the fish and rice crops, and maybe a few golf clubs and ski resorts picked up from the receivers, like this we crack the world's second biggest market and pay a firesale price to do it, another Boot Hill first!

But what counts in Japan is filling in details, tiny brush strokes and infinite patience, which is how a guy here gets to be a Living National Treasure, if he lives so long, and I must say sitting here twiddling my thumbs I wonder if my iridium Boothillcard expires before I do.

My friend sets me up with all the right introductions, to MoF and the Bank of Japan and a fixer who is minus his little finger, and the file gets put up to the top guy in MoF, Mr Yen, and then down again, it seems he is a little occupied just now, but he wishes to know in principle how do we feel about taking on a life insurer as well, or maybe Yamaichi?

How I feel is out of my depth, but naturally I do not say so, I express the keenest gratification and look forward to exploring areas of mutual interest in an appropriate spirit of harmony, and this gets me in to see Mr Yen, who receives me ceremoniously, he pours me tea and tells me: in the words once made immortal by our sacred emperor, events develop in a way not wholly to Japan's advantage.