Japan banks, US carmakers seek funds

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London, Nov 19: Japan's No3 bank sought to beef up its capital on Wednesday, markets fretted over the stricken US car industry and Britain's central bank said it considered cutting rates even more dramatically than it did this month. European Central Bank President Jean-Claude Trichet said the deep financial crisis marked the first time since World War Two that the finances of the industrial world have been at stake.

He said the situation could be solved by joint efforts of central banks and governments, with a key role for the private sector, but declined to be drawn out on how long it would take.

“It will take time, but we have to all be up to our responsibilities in a difficult episode,” Trichet told Sky Television late on Tuesday. The Bank of England seemed to share his view.

Minutes of its last meeting, when it cut interest rates by a shock 1.5 %age points, showed it considered an even bigger reduction to tackle a recession that has now been confirmed. The Organisation for Economic Cooperation and Development said Spain's economy would shrink by 0.9 % next year due to falls in housebuilding and consumer spending. The 15-nation euro zone, of which Spain is part, is already in recession.

Japan's third-largest bank, Sumitomo Mitsui Financial Group, said it planned to raise at least $2.9 billion in an issue of preferred securities to beef up a capital base rocked by rising bad loans. Once thought to be relatively unharmed by the global credit crisis , Japanese banks are now scrambling to raise cash as recession and plunging domestic stocks sap their capital. The head of Nomura Holdings Inc, Japan's biggest brokerage, offered a glimmer of hope, saying he thought the global liquidity crisis was over. But he said the world's real economy was now the problem. “The next issue depends on how the nations of the world supply financial support,” particularly in China, Nomura Chief Executive Kenichi Watanabe told a media lunch. Authorities worldwide have recapitalized banks, thrown funds into frozen money markets and acted to revive their economies, at a cost approaching $5 trillion—a process that continues. Russia's central bank said it had sold $57.5 billion of its reserves over the last two months to defend the rouble and contributed $14 billion to a government bank bailout programme.