Japan

Japan's financial regulator said Friday it has halted operations of a little-known Tokyo money-management company after the firm allegedly lost billions of dollars in client money, The Wall Street Journal reported. In one of the biggest cases of its kind in Japan, with Tokyo's reputation as a financial center still bruised by the billion-dollar Olympus Corp. accounting scandal, the regulator said investigators found that AIJ Investment Advisors Co. can't account for "most of" the 183 billion yen, or about $2.3 billion, in pension-fund assets under management.

Western investors in Japan's disgraced Olympus have accused its banks of trying to take control of the boardroom by stealth, amid media reports that the firm's major creditors are set to install their own appointees in the top jobs, Reuters reported. Foreign investors in the maker of cameras and medical equipment, engulfed last year by a $1.7 billion accounting fraud, have been arguing for a complete renewal of the board, including outside talent untainted by the scandal.

Japan Airlines Co. outlined a five-year plan that includes spending $6 billion on new aircraft as the carrier emerges from two years of bankruptcy protection, The Wall Street Journal reported. JAL has been turning its business around more quickly than expected by withdrawing from unprofitable routes, modernizing its fleet and cutting operating expenses. The airline has reduced its work force by a third. The strategy shows how the airline is embarking on an offensive to increase profit and growth amid intensifying competition.

Doubling Japan’s sales tax by 2015 won’t be enough to contain the nation’s growing debt load and the government needs to outline how it will pay for swelling social-welfare expenses, a Standard & Poor’s analyst said, Bloomberg reported. “There’s no way that would be enough,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in a phone interview, referring to the plan to raise the levy by 5 percentage points.

The International Monetary Fund is conducting "stress tests" on Japanese banks to gauge how vulnerable they are to a potential drop in the value of their huge holdings of Japanese government bonds, people familiar with the matter said. The move could sharpen investors' focus on the risk to Japan's economy from its ballooning debt, The Wall Street Journal reported.

Japan Airlines plans to raise more than 500 billion yen ($6.5 billion) ahead of re-listing its shares as early as September, a source with knowledge of the matter said, marking a sharp turnaround for the carrier following its bankruptcy in 2010, Reuters reported. A government-backed fund overseeing the airline's restructuring has said it would aim to recoup its 350 billion yen investment through a public offering by January 2013, three years after it went under with 2.3 trillion yen in debts.

Japan's ruling party compromised on a plan to double the sales tax by 2015 to help reduce the world’s largest public debt, delaying implementation by six months to help lawmakers meet a campaign pledge, Bloomberg News reported yesterday. The proposal by Japanese Prime Minister Yoshihiko Noda would raise the sales tax from 5 percent to 8 percent in April 2014 and to 10 percent in October 2015. The agreement, reached late yesterday, must be approved by a government panel led by Finance Minister Jun Azumi before discussion with the opposition.

The Japanese government told the operator of the ravaged Fukushima Daiichi nuclear power plant yesterday to consider accepting temporary state control in return for a much-needed injection of public funds, in effect proposing an interim nationalization of the struggling utility, the New York Times reported yesterday. The order came after Tokyo Electric Power requested ¥689.4 billion ($8.8 billion) in government aid to help pay for its response to the nuclear accident at its Fukushima site.

Japan's Financial Services Agency (FSA) said that it will hire 32 officials to help tighten oversight of illegal trading at securities firms and other regulations as it boosts its headcount and budget for next year, Bloomberg News reported yesterday. The regulator plans to increase its net headcount to 1,548 people in 2012, the most in at least in five years, as its budget grows by 4.1 percent to 23.1 billion yen ($296 million), the agency said. The FSA penalized at least 35 financial institutions this year, including Citigroup Inc. and UBS AG, for breaching Japanese securities rules.

The Japanese and Indian governments agreed Wednesday to set up a three-year, $15 billion bilateral-currency swap line in an effort to buttress their economies against Europe's sovereign debt crisis, the Wall Street Journal reported Wednesday. The new swap line - five times that of the previous arrangement that expired in early summer - follows a Japan-South Korea deal in October to boost their bilateral swap pact to $70 billion from $13 billion. The moves signal spreading doubts among Asian economic powerhouses about the ability of European leaders to fix their problems anytime soon.