Daiwa Bank Ltd. said it is reassessing its U.S. and international operations in the wake of massive trading losses.
The announcement raised the possibility that the Japanese bank might scale back or close some of its U.S. operations following the discovery that one of its New York-based traders had lost $1.1 billion over an 11- year period.
In a statement released earlier this week, the bank said it plans to "emphasize business in Southeast Asia."
"The international business unit and other areas of the overseas network will be reevaluated," the bank said.
U.S. regulators last week issued a cease and desist order, forcing the bank to wind down trading activities. Analysts said this week's statement sets the stage for more dismissals and cutbacks in Daiwa's U.S. operations.
"More heads will roll," predicted Mark Gross, a senior vice president with the rating agency IBCA Inc. in New York. "You really have to ask yourself why they ever needed a big trading operation in New York to begin with."
On Monday the bank disclosed $97 million in unreported losses between 1984 and 1987 from unauthorized trading at its New York trust company.
Daiwa also said it was halting all proprietary trading in U.S. Treasuries, and setting up a management control office within the bank. Daiwa said it would turn control of personnel, inspection, administration, and computer systems at foreign offices directly over to Tokyo.
Daiwa officials also reported that several bank officials had been involved in the original scam at the New York branch, which had at first been blamed entirely on one former senior bond trader.
Daiwa named David Drewery, a director of the bank and general manager of the U.S. commercial banking division, as general manager, replacing Masahiro Tsuda. In Tokyo, Takashi Kaiho was named president to replace Akira Fujita. Fumio Kitora, president of Daiwa Bank Trust Co., is also scheduled to resign.
Daiwa officials were unavailable for comment. However, analysts said that Daiwa's decision could signal the start of a radical revamping.
"The Japanese have been retreating from the U.S. market for several years," Mr. Gross said. "They got pushed out of letters of credit because of their low ratings, they're still licking their wounds from bad real estate lending, and they don't have the kind of financial clout they had several years ago," he added.