Tokyo - The banking licence of Credit Suisse Financial Products (CSFP), Credit Suisse Group?s derivatives unit, would be revoked for obstructing official investigations and offering inappropriate products to clients, Japanese financial regulators said yesterday.
Regulators also ordered a partial suspension of Tokyo operations at four other units of the Credit Suisse Group, as well as at Kokusai Asset Management, a unit of second-tier Japanese brokerage Kokusai Securities.
The revocation of CSFP?s licence was among the harshest penalties ever imposed on a financial firm operating in Tokyo, analysts said.
The penalties, which were in line with expectations, signalled the regulators? resolve to tighten control on foreign firms at a time when Tokyo?s markets were opening up to competition under Japan?s ?Big Bang? deregulation.
The Financial Revitalisation Commission said CSFP?s operations would be suspended from August 5. Its Japanese licence would be revoked on November 30.
?CSFP?s Tokyo branch ... evaded and obstructed investigations and offered extremely inappropriate products to clients - in view of their disclosed financial position - in large volumes and on a repeated basis,? the commission said.
Credit Suisse Group said the revocation of CSFP?s licence was without precedent in Japan. ?Although the group believes that the sanction is disproportionate to the criticised conduct, it will comply with the sanction,? it said.
The banking group commissioned an independent study of problems at the Japan unit, asking for help from an outside law firm. It dismissed some executives in connection with the matter.
The other four Credit Suisse units penalised by the authorities were Credit Suisse First Boston; investment bank Credit Suisse Trust & Banking; Credit Suisse First Boston Securities (Japan) and Credit Suisse Asset Management.
Japan?s regulators had been looking into whether Credit Suisse Group firms in Tokyo had engaged in any ?inappropriate? transactions to help clients conceal losses by bouncing them from one account to another, possibly using derivatives transactions.
?The move was good in terms of firing a warning shot,? said Hideki Naito, a managing analyst at Standard & Poor?s MMS International.
?Japan?s regulators had been sweet to outsiders while taking a hard-line stance against domestic players. The view that Japan is an easy market for foreigners will change.?
Regulators have also launched inspections of Lehman Brothers and the Cresvale Group, the Tokyo operations of two US brokerages. Findings could be announced as early as next month.
Japan?s Financial Supervisory Agency, born last year out of a series of scandals that entangled the powerful finance ministry, has become known for tough and transparent supervision of financial firms on the basis of clear and fair rules - a break from the murky discretionary system of the past.
?The Japanese financial watchdog gained high marks, especially from foreigners,? one foreign bank trader said.
He said most banks had refrained from engaging in irregular derivatives trading.