Lenders will confront Japan's Olympus Corp next week to demand an explanation for an accounting scandal engulfing the firm, a banking source said on Friday, though he denied reports they would seek more security over their loans.

Prime Minister Yoshihiko Noda also weighed in, describing and calling for strict measures to preserve financial markets confidence.

The disgraced maker of cameras and medical equipment risks being delisted from the stock market, and is being investigated by police and regulators, after it admitted this week to hiding investment losses for decades and using M&A payments to aid the cover-up.

The Nikkei newspaper said the concealment could have exceeded 130 billion yen ($1.68 billion) at its peak, adding creditors were likely to press for a change in lending terms.

But the banking source denied this was the purpose of the meeting between Olympus and its creditors, which include Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Mizuho Financial Group. The meeting is likely to take place on November 16, two banking sources said.

Noda later told a news conference the government attached great importance to strict and transparent accounting and that Olympus case needs to be dealt with strict measures and Japan wants to secure financial market confidence by doing so.

Delisting would effectively leave the 92-year-old company cut off from equity capital markets at a time when its shares have already lost three-quarters of their market value and its balance sheet is vulnerable to major asset writedowns.

The stock see-sawed in heavy trade on Friday, losing as much as 10 percent to 435 yen in an initial wave of selling then recovering within minutes to register a small gain.

It finished at 460 yen, down 5 percent on Thursday's close, having lost $7.1 billion in market capital since the scandal broke on October 14.

Traders said the volatility would likely persist, with buyers emerging as the stock sinks close to its book value, thought to be around 430 to 436 yen.

This is what the traders are rallying on right now and that perceived price point is creating demand, said Masayoshi Okamoto, head of dealing at Jujiya Securities.

Olympus had about $9 billion in short-term and long-term borrowings on its books as of June 30, including corporate bonds.

'VAST NEGATIVE RAMIFICATIONS'

Tokyo's stock exchange has told Olympus it will be delisted if it fails to report earnings by December 14. Olympus says it aims to meet that deadline.

Delisting would take effect on January 15 in principle if Olympus does not meet the reporting deadline. Even if it meets the deadline, the bourse could still decide to delist the company, depending on the scale of its past misreporting.

Olympus's largest foreign shareholder, Southeastern Asset Management, has said delisting would have vast negative ramifications for foreign investment in Japan.

The parties who are responsible for this, the past management teams and the board of directors, are the ones who need to be sanctioned and the good parts of Olympus need to be protected for the good of the public, the staff, not to mention the shareholders, Josh Shores, a principal at the fund manager, said on Thursday.

Nikkei's report on Friday said Olympus had hid its long-standing investment losses behind a facade of inflated bank deposits and securities holdings, a wall of assets which reached its peak at end-March 2005.

Quoting unnamed sources, it said Olympus had moved the impaired securities off its books -- a trick known in Japanese as tobashi -- to prevent painful writedowns that would have followed the adoption of fair value accounting in fiscal 2000.

Olympus admitted to the concealment on Tuesday, having spent weeks denying allegations by ex-CEO Michael Woodford of improper accounting and questionable deal-making.

It said the evidence of wrongdoing had been unearthed by a third-party committee it had commissioned last week to probe the claims.

The third party panel will release its findings in early December, a move legal experts said could trigger a raid on Olympus by prosecutors. The Tokyo Metropolitan Police have launched their own probe, media have said, but prosecutors will likely take the lead in the case.

Olympus shares started tumbling in October when Woodford was sacked. Woodford says he was fired for asking questions internally about several unusual M&A payments, but Olympus says the Briton was fired for his management style and lack of understanding of Japanese culture.

Olympus account filings, and company data obtained by the Nikkei, suggest the company made efforts to clean up its long-standing investment losses through the 1990s but may have missed an opportunity in early 2000 to wipe the slate completely clean.

In March 2000, Olympus took 17 billion yen in expenses to write off losses on murky investments known as tokkin money trusts and swaps, which followed 38 billion yen charged against profits in the preceding nine years for realized and paper losses on other sour investments, the public filings show.

At the time it took the big tokkin writedown, just as the dot-com boom was turning to bust, Olympus appeared to have only another 30 billion yen in disguised losses to realize in order to finally deal with all its troubled investments, according to previously undisclosed data published by the Nikkei on Friday.

But with the bursting of the dot-com bubble, the chance to wind them up without too much extra pain appeared lost as global markets tumbled. By March 2001, Olympus was forced to come up with 125 billion yen worth of dubious assets on its balance sheet to cover the hole, the Nikkei said.

Olympus is not the only scandal catching attention.

Daio Paper Corp closed down 18.8 percent on Friday, having been put on the stock exchange's supervisory list the day before because Daio said it would likely miss a November 14 deadline for posting its first-half results.

Mototaka Ikawa, 47, who stepped down as Daio chairman on September 16, borrowed 10.6 billion yen ($140 million) from seven Daio subsidiaries and diverted the money to his own accounts, the firm revealed last month.

($1 = 77.520 Japanese Yen)