Bank of Tokyo

Published 01 Jan 1992
Reference 4385
Industry Banking
Region Asia
Summary

In October 1990, the president of the Bank of Tokyo must design a financing plan with which to bring the bank into compliance with the international BIS capital adequacy standards. The alternatives include: (a) slowing the growth of the bank, (b) issuing equity, and (c) issuing convertible subordinated debentures. The tasks are to compare the equity and convertible tactics, and to recommend a possible price for the convertible issue.

Teaching objectives

The case may serve to meet some or all of the following objectives: Explore the rise and use of hybrid securities Exercise convertible bond valuation skills Consider two infrequent, but nonetheless massive determinants of corporate financing need - government fiat and financial market crashes