Regulators have been looking into whether CS Group firms in Tokyo engaged in so-called "tobashi" deals, in which a company's losses are hidden by transferring them from one account to another, possibly using derivatives transactions.

The case has been closely watched by the financial community here as a gauge of how Japan's tough-talking regulators plan to deal with foreign institutions as Tokyo opens its door to more global competition in the Financial industry.

A CS spokesman in Tokyo confirmed that the meeting with the Financial Reconstruction Commission (FRC) was not scheduled on Monday, as originally expected, but declined to comment further.

Sources close to the watchdog, Financial Supervisory Agency, said the agency is likely to revoke the banking licence of Credit SuisseFinancial Products (CSFP), a unit mainly handling derivatives products, after finding it obstructed official investigations and conducted inappropriate transactions.

The FRC, which oversees FSA, has a final say over whether to revoke the banking licence.

The penalties may also include suspension of some Tokyo operations at other units: Credit Suisse Trust & Banking Co, CS's investment banking arm Credit Suisse First Boston (CSFB), Credit Suisse First Boston Securities (Japan) and Credit Suisse Asset Management, the sources said.

The daily Yomiuri Shimbun said on Monday that the FSA had found that about 60 Japanese firms, including some failed banks, used CSFP asset management products to help hide losses totalling 300 billion yen.

The CS spokesman declined to comment on the report.

Western bankers have complained that tobashi deals have been tacitly allowed by Japanese authorities and accountants amid efforts to restore the nation's banking system to health.

Separate probes have recently beenlaunched into the Tokyo operations of Lehman Brothers and Cresvale Group. The two US financial groups have said they believe the investigations are part of routine checks by the watchdog.

CS Group has apologised to the FSA for some obstruction of the investigation by its staff during the early stages.

The group said in May that it had taken disciplinary action against some of its managers after an independent inquiry found they had hidden and destroyed documents to conceal activities that may have violated Japan's strict "firewall" separation of banking and securities businesses.