Guide to Analysing Companies

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the Tower of London to the east. It is also the collective name
given to the many financial institutions in the area, as in “the
City expects interest rates to fall”. The City (also sometimes
known as the Square Mile) sprang up where it is because in the
past all banks had to be based within walking distance of their
supervisor, the bank of england. These days, the throng of
banks and securities houses that make the City of London
the world’s busiest international financial centre are just
as likely to be housed in tower blocks further east in Canary
Wharf or elsewhere in London.
City banks
The (shrinking) band of large banks that dominate Japan’s fi-
nancial system. They not only lend vast amounts to Japanese in-
dustry (and not much to Japanese consumers), but they are also
intertwined with the big industrial and financial conglomerates
(called 
zaibatsu) which contributed so much to Japan’s post-war
economic success. Yet what was a strength in the past has also
become a weakness. The banks’ extensive shareholdings in
their customers are a boon when share prices are buoyant but a
headache for the banks and the government when they are not.
The lower the value of the banks’ shareholdings, the thinner is
the layer of fat protecting them from possible insolvency. The
banks’ holdings in industrial groups have also made it harder
for the banks to write off bad loans when the economy falters
and for the industrial groups to raise new capital with which
to restructure themselves.
Class action
A lawsuit brought by one party on behalf of a group of individ-
uals sharing the same grievance, for example, a legal action (al-
leging fraud, say) initiated by one shareholder on behalf of all
shareholders. In the United States, where such actions are most
common, companies insure themselves against the risks of
having to pay compensation to successful claimants.