The recent failure of Sogo Co. has revived a nightmare for major Japanese banks whose share prices are falling to levels that bring to mind early 1999 and the country's acute financial crisis.

That's because the department store operator's filing for court protection earlier this month has brought renewed scrutiny to banks' bad-loan problems.

Market players fear that many other ailing firms may follow the same path as Sogo. If that proves to be the case, it will add a further burden atop the massive bad loans already weighing on banks.

The financial crisis, which was triggered by the collapse of Yamaichi Securities Co., a major brokerage, in November 1997, was aggravated in the subsequent two years by a series of bank failures, including those of the Long-Term Credit Bank of Japan and Nippon Credit Bank. The crisis, however, has been glossed over for some time thanks to massive governmental injections of taxpayers' money.

Now that gloss is losing its luster. The share price of the Industrial Bank of Japan, which was below 500 yen in early January 1999, recovered to above 1,400 yen in October 1999, following the announcement of its integration with Fuji Bank and Dai-Ichi Kangyo Bank.

But a day after Sogo's failure on July 12, IBJ, the department store's biggest lender, saw it's share price plunge to 706 yen. It stood at 686 yen after Wednesday trading.

Other major banks have found their share prices on a similar spiral.

Sanwa Bank's shares, which stood at around 800 yen in January 1999, went up to around 1,700 yen in August that year. It closed Wednesday's session at 868 yen.

Prospects for the future are scary as some analysts warn that banks' loan-loss reserve funds, even though currently perceived as adequate, will not be enough if several big borrowers request debt waivers or go under.

Many big construction companies and retail chains are already teetering precariously.

It was particularly unlucky for the banks that Sogo's failure came as many firms are trying to dissolve cross-shareholding ties with their creditor banks.

The dissolution of these cozy ties -- prompted by a desire to introduce a market value-based accounting system in March 2002 -- was already putting downward pressure on overall stock prices.

According to an estimate by Nomura Securities Co., major banks alone will sell off cross-held shares worth 3.5 billion yen through March 2001, exceeding by far the record 2.6 billion yen sold in the past fiscal year.