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| Japanese Banks Snap Up Wall St. Holdings |
| 2008-09-24 |
| Major Japanese banks, fat with cash and nearly free of toxic investments, are spotting opportunity in the global financial mess and snapping up substantial holdings on Wall Street. Because many Japanese banks and brokerage houses have vast amounts of cash while U.S. banks are increasingly desperate for it, analysts here say more major purchases are likely in coming days and weeks as the financial crisis churns on. Nomura Holdings on Tuesday announced it would buy the European and Middle Eastern divisions of the failed Lehman Brothers investment bank -- just one day after it had picked up Lehman's Asia-Pacific franchise. Lehman filed for bankruptcy protection last week. Japan's largest bank, Mitsubishi UFJ, said Monday it would acquire 10 to 20 percent of Morgan Stanley, a deal that could make the Tokyo bank the largest shareholder in a profitable company that is one of the crown jewels of global investing. The deal is valued at up to $8.4 billion, a relative snack for a bank with $1.15 trillion in deposits as of March. It fits with the bank's recent record of acquiring overseas holdings in showcase financial companies. It spent about $10 billion in August to buy the remaining shares of California's second-largest bank, UnionBanCal Corp. "This is a once-in-a-generation opportunity," Kenichi Watanabe, president and chief executive of Nomura, said in a statement. He added that "our ability to capitalize on this opportunity in spite of such volatile markets reflects our financial strength." He call the two deals "transformational" for Nomura. Japan's chance to buy up investment talent that its banks and brokerage firms have long coveted is, in part, a function of turmoil on Wall Street, where investment firms are desperate to cover bad wagers on subprime mortgages and other failed speculation. But it is also the culmination of the slow, stolid recovery of banks and other financial institutions from Japan's own market meltdown in the 1990s. "We didn't take part in the good growth of the worldwide economy in the 1990s, and now we are not getting hit by the downward trend," said Oki Matsumoto, chief executive of Monex Group, one of Japan's largest online brokers. "Japan has huge reserves of capital. We are much safer than any other country." Banks and brokerage houses here spent nearly two decades rebuilding, selling off bad debt and devouring one another in mergers. These mergers, as several weaker banks were digested by stronger rivals, account for the alphabet-soup names of such banks as Mitsubishi UFJ. Banks here have also changed their credit culture. Before, they lent money on the basis of assets, much as U.S. lenders still do. Now, many banks here analyze the cash flow of their clients before they extend large amounts of credit. |
| Posted by:Fred |