Companies looking after their staff for life has been part of the fabric of modern Japanese society for several generations now, so putting companies into bankruptcy, at some level, undermines part of the social contract. Japan’s banks are notorious for keeping failing companies hooked up to financial respirators, at great cost, rather than putting them into bankruptcy.Įnding decades-long relationships with big companies that are household names is admittedly not easily done. This, however, just illustrates how important it is for Japanese banks to break their bad habit of continually bailing out struggling companies at almost any cost. If they do extend the loan, the two banks’ outstanding exposure to Sharp is estimated at about ¥260bn each. They are living the old joke that if you owe the bank under a million dollars you have a problem, but if you owe the bank more than a million dollars it is the bank that has a problem. To be fair to the banks, however, they are in a tough position. To show just how detached from reality these banks are in their dealings with Sharp, their idea of playing hardball is merely demanding collateral for extending new loan - a laughably soft position. This obviously makes it hard for them to do the right thing and stop lending the company money. Mizuho and Mitsubishi UFJ, as well as being Sharp’s biggest creditors, are also shareholders.
The loan would be an add-on to the ¥66bn facility the company secured in July.Įverything about Sharp and its relationship with its banks shows what is wrong with business in Japan.
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It is in talks with its major creditor banks, including Mizuho Corporate Bank and Mitsubishi UFJ, about getting a ¥150bn loan to keep it afloat while it works out how to restructure its balance sheet.
Sharp owes an asphyxiating ¥2.5trn (US$31.8bn) to banks, bondholders and CB holders.
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