Lehman aftermath: Japan adds $24B into money markets
HONG KONG -- The Bank of Japan injected $24 billion into money markets Tuesday as regulators across Asia moved to bolster their financial systems after the collapse of U.S. investment house Lehman Brothers.
From Tokyo to Hong Kong and Seoul, operations of Lehman's local units were suspended and governments sought to reassure investors that the toll on regional companies exposed to the bank would be limited.
"The Bank of Japan will carefully monitor recent situations surrounding the U.S. financial institutions and their influences, and will continue to strive to ensure smooth settlement of funds and maintain stability in financial markets through measures such as appropriate money market operations," Gov. Masaaki Shirakawa said as the institution pumped 2.5 trillion yen into money markets through two separate injections.
Cabinet ministers, along with the central bank chief, were also to hold an emergency financial meeting.
South Korea's central bank, meanwhile, said it was intensifying its monitoring of financial and foreign exchange markets. The Bank of Korea would provide extra foreign currency liquidity if needed via the swap market to "calm nerves of market participants," it said.
Reeling from $60 billion in toxic real-estate debt, Lehman Brothers Holdings filed for Chapter 11 bankruptcy in New York on Monday. The storied, 158-year-old Wall Street firm — America's fourth-largest investment bank — was unable to secure an investment partner despite a flurry of last-minute negotiations over the weekend.
Investors were also shaken by news Monday that Merrill Lynch sold itself to Bank of America Corp. for about $50 billion.
In Tokyo, the Japanese unit of Lehman Brothers Holdings requested bankruptcy protection. Regulators in South Korea, Hong Kong and Australia restricted or stopped altogether the operations and trading activities of local Lehman businesses.
As governments appealed for calm, though, there were signs of fallout from the bankruptcy.
In China, an investment fund warned of potentially heavy losses. Hua An Fund Management Co., one of a number of funds operating foreign investment funds under China's "qualified domestic institutional investor," or QDII, program, did not say how much might be at risk.
