[First Tranche of $2 Billion ADB Support Confird for Tomorrow]
[World Bank President Promises Rapid Financial Aid with IMF by Weekend]
[Governnt Expands Foreign Investnt Cap in KOSDAQ to 25% — ADB Support Condition Fulfilled]
[A Total of $8.5 Billion in Foreign Capital to Flow into Korea This Week via IMF, IBRD, and ADB]
[After Soaring, Exchange Rate Plumts to 1,725 KRW per Dollar!]
[Foreign Exchange Market Stabilizing with Early Second Tranche of Aid After Peak Anxiety]
[Governnt Reiterates Commitnt to Rapid Implentation of IMF Agreent]
The crimson sunset was staining everything outside the window in deep red hues.
Seok-won had several freshly printed evening newspapers spread out in front of him, the strong scent of ink still lingering in the air.
On his large, L-shaped desk sat multiple monitors displaying exchange rate graphs and complex economic indicators.
Wearing a white dress shirt, Seok-won rested his chin on his hand and scanned through the
articles related to the foreign exchange market.
"They published the articles right on schedule, just as promised. Not a mont too late."
A faint smile tugged at the corner of Seok-won's lips as he muttered to himself.
It had been agreed in advance that once he released a massive amount of dollars to suppress the exchange rate, the IMF and other international financial institutions would expedite the disbursent of their aid packages, and that fact would be publicly announced imdiately.
"The temptation to announce early aid just to calm the market a bit must've been overwhelming, especially with the rate climbing. But they held out well."
Of course, had the Ministry of Finance buckled under pressure and disclosed the early aid
arrangent due to the ergency of the rate nearing 2,000 won per dollar, Seok-won had the confidence to take on the currency speculators alone.
It wasn't bluster. He had secured a staggering $20 billion in preparation for this very battle. With that kind of firepower, it was entirely feasible.
"If the Wall Street giants like the Quantum Fund had stepped in, it would've been a tougher
fight."
Still, he never once believed he would lose.
"This should prompt the hedge funds holding out in hopes of a rebound to start liquidating their positions before losses grow worse."
Just as if to prove his point, one of the monitors showed that the Korean won was continuing its downward trend against the dollar in the recently closed London foreign exchange market, with no sign of rebounding.
Seok-won picked up the phone on his desk, pressed a speed dial number, and called Landon.
After a few rings, Landon answered in a bright voice.
"I was just about to call you."
"You did a brilliant job."
Landon let out a hearty laugh on the other end of the line.
"It's like they were tackled right in front of the touchdown line. The Wall Street hedge funds are in total chaos."
Seok-won replied with a smile playing on his lips.
"Which is why you have to be careful until the very last second to avoid a fumble. Greed always leads to downfall."
"You're absolutely right."
In Arican football, a fumble refers to when an offensive player drops the ball after being
tackled.
If the hedge funds had been content with forcing Korea to announce its bailout from the IMF, Seok-won wouldn't have intervened. But their greed pushed them further—they tried to drive the Korean governnt over the edge.
That was when Seok-won could no longer stay out of it. In a sense, they had brought this upon themselves.
"In gambling, the loser is the fool," Landon added.
"Keep buying up the won as planned and push the exchange rate down to 1,500."
"Understood."
Landon responded confidently, then added as if rembering sothing important.
"Ah, and I have so news to share."
"Go ahead."
"It looks like LTCB might go bankrupt—just like Takushoku Bank in Hokkaido."
"...!"
Startled by the unexpected news, Seok-won furrowed his brow.
"LTCB? Don't tell
you an the Long-Term Credit Bank of Japan?"
"That's correct."
"There weren't any signs. What happened?"
"Strangely enough, it's related to us."
Seok-won tilted his head slightly in confusion.
"What do you an?"
"Rember how we profited handsoly by buying CDS options from Japan's four major
securities firms?"
"Yes, I rember."
"Well, it turns out Nomura Securities resold so of those CDS options to LTCB, using them as a hedge."
"They hedged them?"
Seok-won's expression turned to one of surprise.
"That's right. And it was as much as a billion dollars," Landon confird.
Since the total amount of CDS options contracted with Nomura Securities was three billion dollars, that ant a full one-third of it had been offloaded onto the Long-Term Credit Bank of Japan.
The mont Seok-won heard that, the puzzle pieces in his mind snapped perfectly into place.
"No wonder. When the CDS options issue flared up, Nomura's losses seed strangely smaller than the other firms. So that's why—LTCB took the fall for them."
"I had the sa realization just now," Landon agreed, then continued.
"They kept it hidden for a while, but after Hokkaido Takushoku Bank collapsed, the Ministry of Finance started ergency inspections of the comrcial banks, and that's when everything ca to light."
"I see."
Seok-won gave a small nod, indicating his understanding.
In truth, his initial shock hadn't co from the idea that one of Japan's top-tier comrcial banks —the Long-Term Credit Bank—might go bankrupt.
He had already known that following the collapse of Hokkaido Takushoku Bank, LTCB would be next, triggering a deeper financial crisis in Japan.
What surprised him was the timing. He had expected the collapse to happen next year—not now.
"So once again, my interference has thrown off the original tiline."
Had Seok-won not made CDS option contracts with Japan's four major securities firms in the
first place, LTCB wouldn't have incurred a devastating billion-dollar loss.
He had ntally prepared for this, but seeing the flow of events begin to diverge from what he knew still stirred complex emotions.
Suddenly, a thought struck him, and Seok-won's expression turned puzzled.
"A billion dollars is no small amount, but we're talking about a ga-bank—one of the largest in Japan and even the world. Can bankruptcy really be on the table so easily?"
"I don't think they'll actually go bankrupt," Landon replied. "But apparently, the amount of bad debt they're holding is massive."
"How massive are we talking?"
"Nothing has been officially announced yet, but if the information obtained by Director Porter is accurate, it's at least 3 trillion yen."
Seok-won widened his eyes, wondering if he'd misheard.
"Did you say 3 trillion yen?"
"Yes. That's roughly 24 billion dollars."
"That's insane."
Seok-won shook his head in disbelief.
Even for a world-class gabank, that level of toxic debt wasn't sothing they could just gloss over.
"And the real problem is—that's just the minimum," Landon added.
"Considering how aggressively they lent out real estate loans during the bubble era—not just in Japan but in the U.S., Australia, and Southeast Asia—there's probably still a mountain of bad assets waiting to be uncovered."
"I agree," Landon said.
Not only was their core business of corporate finance heavily hit by the burst of the bubble, but the real estate finance arm—which had expanded operations using extre leverage—also must've amassed significant bad debts.
"The size of the non-performing loans is large," Landon said, "but given that LTCB has been a critical source of funding for many companies, I don't think the Japanese governnt will just stand by and do nothing."
"So they're likely to inject public funds."
"Exactly. If LTCB runs into serious trouble, a huge number of Japanese companies will
imdiately be affected."
Considering LTCB played a role similar to South Korea's Industrial Bank, that seed highly likely.
'In the original tiline, the Japanese governnt did try to save it by injecting massive public funds.'
But no matter how much they dug, the mountain of bad debt just kept growing. In the end, the Japanese governnt had no choice but to nationalize the bank.
'If I rember correctly, the public funds poured into LTCB alone amounted to more than 4
trillion yen.'
That was a staggering sum. And even after burning through such astronomical funds, the
governnt still failed to fully normalize the bank and eventually sold it off to a foreign entity.
Since it was a failing bank, the sale price had to be rock-bottom, and most of the public funds
invested were never recovered.
The over 4 trillion yen that vanished into thin air ultimately beca a burden on the Japanese
people.
'Wait... this is—'
As he thought about it, Seok-won realized that this process mirrored what had happened in Korea after the IMF crisis—the handling of failed financial institutions, almost like a decalcomania.
With a strange feeling creeping in, a flash of insight crossed Seok-won's eyes.
He imdiately sat up straight and grabbed his phone.
"Tell Director Porter to find out in detail which companies' bonds the Long-Term Credit Bank of Japan is holding."
"What do you plan to do with that information?" Landon asked curiously at the sudden
instruction.
"Once public funds are injected and the governnt tries to rehabilitate the bank, there's bound to be a fire sale of bad loans."
"Fire sale" originally referred to goods being sold off cheaply after a fire, and in finance, it's used for selling off non-performing loans at steep discounts.
Realizing the intent right away, Landon let out a whistle.
"You're planning to find hidden treasures among those piles of junk debt."
"Exactly. The bank lent out enormous sums to various Japanese corporations and real estate
projects. If we dig deep enough, there'll definitely be so valuable bonds in the mix."
"Normally, anything profitable gets separated out ahead of ti, but with this sheer volu of bad loans to handle, mistakes and oversights are inevitable. I'll make sure Director Porter gets the instruction."
"And not just LTCB. Have him gather lists of non-performing loans from other failed financial institutions as well. Go through them all thoroughly and see if there's anything worth salvaging."
"Understood."
After talking a bit more and ending the call, Seok-won set his phone down on the desk.
Then, leaning back against the chair, he rubbed his clean-shaven chin with one hand and muttered to himself.
"The Long-Term Credit Bank of Japan… If I rember correctly, after it was nationalized and then sold off again, the buyer was a U.S. private equity fund, though I can't recall the na."
After the acquisition, they collected steady high dividends, and a few years later, they re-listed the stock on the Tokyo Stock Exchange—making a return that far exceeded 100%.
"That was easy money. Would be a waste to just let that slip by. There's no reason I can't pull off what an Arican fund did."
He had already been considering expanding the scale of his Japan branch, and this seed like the perfect opportunity.
Seok-won began carefully mapping out a detailed plan in his mind—not just to buy up bad loans at bargain prices, but to figure out how to devour the Long-Term Credit Bank of Japan entirely and maximize his profit.
Reviews
All reviews (0)