SO brazen was the scheme to buy out Long Term Credit Bank of Japan that the boys at Ripplewood adopted the code-name “Cowboy” for the $1.2 billion buyout of the bankrupt institution from the Government.

Today, “cowboy” is one of the milder epithets used in the Japanese press to describe a deal that is widely viewed as a disgrace, a shameful capitulation by the Government to the gaijin (foreigners) and a colossal misuse of taxpayer’s money.

The numbers explain the rage — Ripplewood and its partners paid $1.2 billion in 2000 for a bank which the stock market today values at some $10 billion. The difference in value, some say, is explained by the Japanese Government’s agreement to underwrite LTCB’s bad loans for a period of three years. The Americans asked for the moon and the Government complied, “like taking candy from a baby” said the Yomiuri Shimbun. It looks that way now, but Ripplewood’s bare-faced cheek has done Japan’s financial sector a huge favour.

LTCB’s metamorphosis from lumbering dinosaur into the nimble chameleon Shinsei would never have happened within the cosy cartel of Japanese banking. It took a rude foreigner to pull the plug on Sogo, the department store which three years ago came cap in hand demanding forgiveness on $800 million of debt. The Americans were not interested in supporting Japan Inc, just in making money — lending was a mug’s game they said, the profit in banking is in charging big fees to manage portfolios and conduct transactions.

The baby was robbed once, but babies grow up. Ripplewood’s grotesque profit is luring other private equity firms to Asia in the hope of quick returns but there will be no more LTCBs. The Japanese Government is already seeking to close a loophole that allows offshore owners to escape tax on their capital gains. Ripplewood has other non-financial Japanese irons in the fire which are not doing so well, including Japan Telecom, which is suffering a revenue squeeze.

After Japan, Korea and China beckon. CalPERS, the US pension fund, has amassed a $1 billion war chest for Asian buyouts, and Carlyle Group is targeting China after taking 36 per cent of a Korean bank. But China is a different society and a different kind of capitalism. Western investors have pumped billions into joint ventures and partnerships in the People’s Republic and are still waiting for returns.

Some of these projects well deserve the “cowboy” epithet but, this time, the man on the horse could well be Chinese.

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