Fuji Bank, the top shareholder and main creditor bank of Yamaichi Securities Co, knew by Oct. 6 that the brokerage had hidden debts of about 260 billion yen, a Fuji executive said Monday.

Fuji, realizing the losses stemmed from illegal "tobashi" trading activities, urged Yamaichi to quickly come up with plans to cope with the massive debts and reconstruct the firm as well as disclose the facts, said Toshiyuki Ogura, senior managing director of the bank. The bank has neither discussed the issue with the Finance Ministry nor confirmed if Yamaichi reported it to the ministry, Ogura told reporters.

Earlier in the day, Yamaichi President Shohei Nozawa said he had learned how much the hidden debts amounted to in mid-November. The firm reported it to the ministry on Nov. 17. If Nozawa's explanation is true, it means Fuji officials heard of the amount before Yamaichi's own president did.

According to Ogura, senior Yamaichi officials came to Fuji's office on Oct. 6 and revealed to their bank's counterparts the existence of the hidden debts. On Oct. 23, other Yamaichi officials showed a draft reconstruction plan, but Fuji officials turned it down as too incomplete. That was the last contact with Yamaichi on the issue, Ogura said.

Fuji has not taken any action since then, while being aware of the dubious deals, according to Ogura. The off-the-book liabilities, which Yamaichi claimed stand at 264.8 billion yen, are one of the major causes that drove the firm to voluntarily close. Yamaichi admitted the debts include those incurred as a result of tobashi transactions.