By Sandra Sugawara
Washington Post Staff Writer
Tuesday, November 4, 1997; Page C02

TOKYO, Nov. 3—Sanyo Securities Co., a financially ailing brokerage firm in Tokyo, filed for bankruptcy protection today, making it the first Japanese securities house to take such action in the country's postwar history.

Japanese authorities sought to minimize the impact that the action by the mid-sized company might have on volatile Asian markets. At a hastily called news conference this evening, Finance Minister Hiroshi Mitsuzuka urged investors to stay calm, saying that Prime Minister Ryutaro Hashimoto had instructed him to take steps to maintain order in Japan's securities market.

The company filed for court-backed protection from creditors under the Corporate Rehabilitation Law. The court suspended Sanyo's ability to take on new business but said it could continue serving customers it already had by refunding money and securities held for them as well as handling other transactions.

Authorities said the company had assets of about $2.48 billion and outstanding debts of $3.11 billion as of the end of September. After the court examines Sanyo Securities' books, it will decide if the company can resume normal operations.

The bankruptcy announcement was unwelcome news at a time when traders are hoping that Asia's markets might be settling down after a roller coaster two weeks.

Still, as new details of a financial aid package for Indonesia and a restructuring plan in that country came to light, the Hong Kong, Taiwan and Singapore stock markets all rebounded sharply in Monday trading, and other regional stock markets also rose. Markets in Japan were closed today. [The Tokyo Stock Exchange's 225-issue Nikkei stock average was up fractionally at the end of the trading day Tuesday, and markets in Hong Kong and Singapore were off by less than a percentage point in midafternoon trading, Bloomberg News reported.]

Analysts also were encouraged by determined market intervention of the central banks of Indonesia, Singapore and Japan, which helped drive up the Indonesian rupiah by 10 percent against the U.S. dollar.

The rise also came amid an announcement from Bangkok that Thai Prime Minister Chavalit Yongchaiyudh will resign this week. His critics have accused him of contributing to Thailand's financial crisis.

A further fall of the Tokyo stock market, where the benchmark Nikkei index had dropped from 20,681.07 in mid-June to 16,458.94 as of Monday, could threaten banks and insurance companies, which hold a substantial portion of their assets in stocks.

Finance Ministry authorities said tonight that they do not expect a widespread loss of confidence in Japanese stock markets as a result of the Sanyo Securities bankruptcy because individual accounts will be fully protected.

Some analysts have been warning that mid-sized securities companies could fail as the country moves to deregulate its finance industries. But Mitsuzuka said he does not believe that similar problems exist at other securities houses.

Sanyo Securities' problems were triggered when it was required to assume massive debts for its affiliated companies in 1994, authorities said. In Japan, parent companies are expected to stand behind the debts of their affiliates. These obligations often do not appear on balance sheets, making it hard for outsiders to know the true financial status of companies.

Now, other companies are being asked to step forward to shore up Sanyo Securities. To cover its customers' money, Nomura Securities Co., Tokyo-Mitsubishi Bank, Daiwa Bank and Nippon Credit Bank have agreed to make donations to a securities industry fund from which Sanyo will probably draw about $160 million, according to authorities.

Sanyo Securities decided to file for bankruptcy protection after a decision last week by nine Japanese life insurance companies to reject the company's request for an extension on repaying its loans.