Tokyo, Nov 22: Yamaichi Securities Co Ltd, one of Japan's top brokerages, said on Saturday it may shut its doors after 100 years in business, as it faced a short-term credit crunch, shrinking business and high-profile scandals.

Options for the beleaguered Yamaichi narrowed considerably after main creditor Fuji Bank Ltd said it was not in a position to take responsibility for rescuing the ``Big Four'' brokerage.

Yamaichi said in a statement that it would make its final decision public on Monday, a national holiday in Japan.

``Our board members are doing their best to seek a final conclusion, including a possible shutdown of our business,'' Yamaichi said in a statement. Should Yamaichi go under, it would be Japan's biggest business failure in the post-war era and its third major financial-sector failure this month, joining second-tier brokerage Sanyo Securities Co Ltd and 10th-ranking commercial bank Hokkaido Takushoku Bank Ltd.

Yamaichi said that its liabilities did not exceed its assets and that it will put top priority on not causing problems for its clients. ``Therefore, we hope our clients will feel safe,'' the statement said.

In emergency news conferences on Saturday morning, Japanese monetary authorities made assurances that the assets of Yamaichi's customers would be protected and that the brokers' woes would not be allowed to disrupt the financial system. ``Stability of markets inside and outside Japan is important,'' Bank of Japan executive director Tadayo Homma told reporters.

``Therefore, the BOJ will consult in a timely manner with the foreign ministry about necessary measures we should take and will deal with any situations appropriately.'' Analysts and industry officials were less sanguine, however.

``It's like an atomic bomb,'' said Osaka regional chief of the Japan Securities Dealers' Association (JSDA),Goro Tatsumi. ``There would be a considerable impact on the securities industry as well as the nation's business as a whole.''

And despite the official assurances, Homma declined to comment on reports that the central bank would extend special uncollateralised loans to Yamaichi to ensure full payouts to its clients.

Customer assets at Yamaichi totalled 24 trillion yen at the end of September, down 20 per cent from six months earlier, while industry sources say many clients withdrew their assets from the brokerage as its problems deepened in recent weeks.

Analysts said without an official bailout or substantial help from private banks, Yamaichi was unlikely be be able to pull back from the brink.Fuji Bank, Yamaichi's main creditor bank and one of the most likely sources of support from the financial sector, made clear on Saturday that it would not ride to Yamaichi's rescue.

A Fuji Bank spokesman quoted the bank's president as saying that Fuji is not in a relationship with Yamaichi that would require it to rescue the brokerage, and that it would consider loans to Yamaichi only if they were backed by collateral.

The future of Yamaichi, already the beneficiary of an official bail-out in 1965, has grown steadily bleaker in recent weeks.

Its image tainted by a scandal over payoffs to ``sokaiya'' corporate racketeers earlier this year, Yamaichi has seen its share price spiral relentlessly lower since November 6, when US credit rating agency Moody's Investors Service warned that it might cut its credit rating. Yamaichi's share ended at 102 yen on Friday, down sharply from its high for the year of 525, set in early January.

More clouds of doubt gathered over Yamaichi on Saturday, when a finance ministry official said that suspicions were growing that the brokerage had vast off-balance sheet liabilities exceeding 200 billion yen ($1.58 billion).The head of the ministry's securities bureau, Atsushi Nagano, told a news conference that the liabilities were thought to include illegal ``tobashi'' or ``pitching'' deals, in which brokerages temporarily shift investment losses from one client to another to help a favoured customer avoid reporting losses.

Analysts doubted that a failure by Yamaichi would spark a melt-down in Japan's financial system, although it was certain to boost concerns that market forces would trigger more corporate failures in coming weeks and months. The latest financial trouble is also certain to heat up debate on the thorny problem of whether to use public funds to clean up the financial system's bad loan mess and thus help prevent Japan's fragile economy from slipping into recession.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.