Kabutocho, Chuo Ward, Tokyo, was one of the leading financial hubs not only in Japan but also globally.
True to its prestigious reputation, the area was densely packed with the Tokyo Stock Exchange at its center, surrounded by the headquarters of major commercial banks, securities firms, and Japanese branches of foreign financial institutions.
Each morning, the streets bustled with financiers dressed in luxury suits and ties, carrying briefcases in one hand as they made their way to work.
As the elevator came to a halt, John Porter, the branch chief, stepped out briskly—his Italian handmade shoes gleaming and a luxury watch gleaming on his wrist.
Walking down the carpeted corridor, he approached the reception desk bearing the English logo "Eldorado Fund – Japan Branch." As he neared, a beautiful female employee stood up and bowed with a pleasant smile.
"Good morning, Branch Chief."
"A good morning to you," Porter replied in fluent Japanese, heading toward the glass entry door.
He pulled out his ID badge, which had a photo attached, and held it against the reader mounted on the wall to the right. The glass door slid open without a sound.
Upon entering, the first thing that caught his eye was the expansive trading floor. One wall was completely covered by a giant market ticker board, and each desk was equipped with at least two or three monitors.
Beyond the wide floor-to-ceiling windows, a stunning view of Tokyo's dense skyline with its towering buildings stretched into the distance.
Against this urban backdrop, the staff moved with purpose, their hands flying over keyboards and phones.
The team had grown considerably, now numbering over thirty employees.
As they checked overnight data and market updates in preparation for the market opening, Porter watched them for a moment, clearly satisfied. Then he moved toward his private office at the back.
Greeted by his secretary, Porter entered his office, removed his jacket, and hung it on a coat rack before taking a seat at his desk.
On the neatly organized desk lay a copy of the Nihon Keizai Shimbun—Japan's premier economic newspaper—alongside a summary report outlining key events from the European and American markets overnight.
Just as Porter picked up the report and began to open it, the door suddenly burst open without a knock. A staff member named Ryder rushed in, visibly flustered.
With a tense expression, he delivered urgent news.
"Branch Chief! Sanyo Securities has just filed for application of the Corporate Reorganization Act at the Tokyo District Court!"
Startled, Porter leapt to his feet and exclaimed, "Is that true?!"
"Yes, the disclosure was just posted," Ryder replied.
As soon as he heard the news, Porter turned to his computer and pulled up the official statement released by Sanyo Securities.
"It's true," he muttered.
"The life insurance companies that had extended unsecured subordinated loans to Sanyo Securities refused to roll over the debt, ignoring the Ministry of Finance's request for cooperation. That became the critical trigger."
The company's financial woes had begun when a massive real estate loan provided by a subsidiary went bad overnight following the collapse of the bubble economy. Sanyo Securities had absorbed the loss, which severely worsened its financial condition.
Then came the prolonged market slump, which only deepened the damage. For the past three years, the firm had been striving for recovery with restructuring efforts led by the Ministry of Finance, backed by its main bank and its major shareholder, Nomura Securities.
That's what made Sanyo Securities' collapse all the more shocking.
"The company has total liabilities of 373.6 billion yen. Out of its 14 affiliated firms, 8 are expected to go bankrupt, and the remaining 6 will likely enter liquidation."
Still standing, arms crossed, Porter commented, "If that level of detail is already public, it's safe to assume the Ministry has decided to go through with liquidation rather than rehabilitation."
"I think so too," Ryder said, revealing his anxiety.
"If the court accepts their corporate rehabilitation application, stock trading will be suspended immediately. Shouldn't we liquidate our position before that happens?"
Following orders from Stone, Porter had taken short positions by short-selling stocks of Sanyo Securities and three other financial firms.
Rubbing his clean-shaven chin thoughtfully, Porter pondered the situation for a moment before making a decision.
"Sanyo Securities' average short-sell price was 198 yen, right?"
"That's correct."
"Alright then. Let's hold the position as is."
"Are you sure about that?"
Ryder looked at him with a hint of concern. Porter grinned, revealing his white teeth.
"This is the first time a listed securities company has gone bankrupt. To minimize the shock, the Ministry will want to expedite the liquidation process."
"Most likely," Ryder agreed.
"So a special liquidation sale will be held soon. If we close out our position then, we can maximize profits."
Hearing that, Ryder's face lit up with a bright smile.
"Then that's what we'll do."
Special liquidation sales, or 整理売買 (seiri baibai), offered investors one final chance to trade shares of a delisted company as a form of investor protection.
"Monitor the Ministry's actions closely. This bankruptcy is bound to impact other financial institutions with large exposure. Keep a close eye on the remaining three companies we've shorted."
"Understood."
As Ryder gave a brief reply and left the room, Branch Manager Porter sat back down in his chair.
He moved his mouse and pulled up the stock chart for Sanyo Securities on his monitor.
The market had just opened, and news of Sanyo Securities' bankruptcy filing had caused a massive gap down, sending its stock price plummeting.
Financial stocks in particular were taking a beating, and leading the collapse was none other than Sanyo Securities, in full freefall as panic selling set in.
[Sanyo Securities: 99.21 (-31.16)]
The price had plunged past the 100-yen mark in an instant, bringing a broad smile to Porter's face.
"I thought it was unlikely… but Sanyo Securities actually went bankrupt. The boss's foresight is amazing, as always."
No matter how many times it happened, it never ceased to impress him.
As Porter considered just how much profit this short bet was going to bring in, his smile deepened.
[Shock! Tokyo Stock Exchange No. 7 "Sanyo Securities" Goes Bankrupt]
The collapse of Sanyo Securities, the 7th-largest mid-to-large brokerage firm in Japan, sent shockwaves not only through Japan but also across the Korea Strait, rattling the Korean stock and foreign exchange markets.
Riiing! Riiing!
"Did you say 5.11?"
"Repeat that!"
"At that price? No way. It just spiked again!"
"Okay. Done!"
"How am I supposed to keep up when the exchange rate keeps shooting up?!"
In the midst of a barrage of nonstop calls, foreign exchange traders clutched phones in both hands, their neck veins bulging as they shouted into their receivers.
With reddened eyes glued to their monitors, they frantically hammered away at their keyboards, scrambling to execute forex trades.
Contrary to expectations, negotiations with the IMF delegation had stalled, and as a result, the exchange rate had started spiking again just a few days earlier.
To make matters worse, the news of Sanyo Securities' bankruptcy had triggered accelerated loan recalls by Japanese financial institutions, pushing the won-dollar exchange rate even higher.
Assistant Manager Na Un-hak, having just completed a trade and set the receiver down, looked up at the large electronic board displaying the USD/KRW rate. Frustrated, he loosened the knot of his tie around his neck.
"Damn. At this rate, the won might really hit 1,500."
[USD/KRW: 1,405.11]
The rate had once seemed to stabilize below 1,100 won per dollar, but in under a week it had surged this high. With that in mind, 1,500 no longer seemed like an unrealistic threshold.
The government had virtually ceased intervention, which meant the upside potential was now wide open.
"At this rate, things could get really bad. What the hell is the government doing instead of wrapping up the negotiations?"
Assistant Manager Na Un-hak scowled and muttered irritably under his breath.
His nerves were frayed, and he craved a cigarette to calm himself. But since he couldn't leave his station during trading hours, he had no choice but to endure it.
Just then, the phone rang again—loud and insistent. Na Un-hak grumbled as he snatched up the receiver.
"Can't even get a moment's peace."
With the exchange rate shooting through the roof and the stock market plunging into the basement—and beyond—the Korean government was being pushed further and further into a corner at the negotiating table.
That night.
In the same suite at the Lotte Hotel in Sogong-dong where they had met previously, Seok-won once again sat across from Choi Jin-woo, the Deputy Prime Minister for Economic Affairs.
Noticing how the minister's complexion had grown even more gaunt in just a few days—likely due to stress—Seok-won spoke first.
"Seems the negotiations aren't going well."
Choi Jin-woo let out a deep sigh.
"It's proving far more difficult than I initially expected."
"That's probably because the IMF is more focused on opening up our financial markets and pushing other agendas than on actually resolving the currency crisis."
Choi gave a bitter chuckle, as if releasing some of the frustration that had built up over time.
"You're absolutely right. Judging by their behavior, it feels less like they've come to help us and more like a pack of thieves trying to strip us down while we're vulnerable."
The words "We brought this on ourselves by responding so complacently, even though we had ample time to prepare" nearly escaped Seok-won's lips—but he bit them back and remained silent.
Instead, he quietly picked up the bottle and refilled Choi Jin-woo's glass with whiskey.
"President Clinton personally called the President earlier today."
Seok-won looked slightly taken aback.
"He's vacationing at Camp David, isn't he? And he called despite that?"
"That's right," Choi said with a heavy nod.
"He urged us to wrap up negotiations with the IMF swiftly, citing the severity of Korea's currency crisis. He also warned that if we don't resolve the situation quickly, Korea could face an even more serious predicament."
"What sounds like a polite suggestion is really a stern warning: comply or the IMF delegation might just pack up and leave."
"That's exactly how I interpreted it."
Taking a sip from the glass Seok-won had just filled, Choi Jin-woo wore a grim expression.
"Even without Clinton's call, the sudden collapse of Sanyo Securities has rocked Japan as well. The stock market is tanking, the exchange rate is spiking—dragging out the negotiations any further just isn't feasible."
Then, locking eyes with Seok-won, he added, "That's why I've decided to accept your proposal, in the hope of ending these talks as favorably as possible."
Seok-won had expected that. After all, it wasn't a deal that would hurt the Korean government—in fact, it stood to benefit them.
He responded with a calm expression, betraying no emotion.
"That's good news."
"But I'd like to amend the terms of the deal."
Seok-won furrowed his brow slightly and asked,
"And what exactly are you proposing?"
"I'd like you to acquire the three merchant banks—bundled together with Ilhan and Hansung Bank."
At that, Seok-won's expression instantly hardened.
And understandably so.
One of the biggest contributors to the currency crisis had been the reckless borrowing of massive amounts of short-term foreign debt by these very merchant banks.
In fact, the situation had become so dire that the IMF delegation was pressing hard for the immediate closure of twelve such institutions. They were, for all intents and purposes, insolvent—on the brink of collapse, with failure imminent even by the next day.
And now he was being asked to take on not one, but three of those failing banks. There was no way to hide the tightening of his expression.