| Juntaro Fujii | ||||||
Juntaro Fujii, the president of Tokyo Mitsubishi Securities, is remarkably buoyant when he sits down to explain the planned merger between TMS, Kokusai Securities and Tokyo-Mitsubishi Personal Securities. A diehard supporter of Chelsea FC, he is delighted by the 4-0 victory his team inflicted on Liverpool the previous day. Football is in his thoughts when he starts talking about the deal. “This merger will be like us moving into the top quarter of the Premier League, sitting behind Manchester United, hopefully a bit better than Chelsea, perhaps more like an Arsenal,” he says.
The Tokyo-based banker developed a passion for football during the seven years that he spent living and working in London. He also developed a taste for British tabloid newspapers. Some people weren’t that impressed by his choice of reading matter. “My ex-secretary was a very intelligent lady and she used to look at my paper and go ‘Jesus! You’ve bought the Mirror again’,” he says. “But I liked to read the Mirror as well as the FT. It’s a matter of balance and combination.”
The new combined company is set to become the fourth-largest brokerage house in Japan, with only Nomura, Nikko Salomon Smith Barney and Daiwa ahead. By putting the wholesale-focused TMS together with Kokusai, TMS will gain access to Kokusai’s retail distribution network of 73 branches across Japan. Fujii reckons this will create a more balanced business. But trying to gain a foothold in the retail securities business and making it a success is not going to be easy. And foreign brokers can vouch for that. Many have got burnt attempting to set up their own Japanese retail securities business and are still counting the cost. Examples include Morgan Stanley, which closed its two offices in November, and Charles Schwab, which decided to close down operations in December.
Merrill Lynch Japan Securities has yet to post a profit three years after buying Yamaichi Securities.
The failure rate doesn’t faze Fujii. He says: “The reason why it’s so strategically important for us to utilize Kokusai’s retail network is because private investors are trying to change their attitudes. It won’t happen immediately, but gradually. And we will help them increase their level of sophistication.”
Tempting the risk-averse, rich private Japanese investor back to the markets will take some time. Their individual financial assets amounting to about ¥15 trillion ($117 billion) sit moribund in postal savings accounts and commercial bank accounts. Government measures, such as the liberalization of brokers’ fees in October 1999 and the setting up of a government deposit guarantee, have failed to motivate a shift of funds towards the brokers. But Fujii likes a challenge.
Before entering the world of finance, he studied law at Tokyo University where he aspired to become a professor. But an interest in student politics brought him into conflict with the university’s policies of bringing police squads onto campus. He decided to leave and entered banking. “I never look back on my original dream and wish it had turned out differently. I have been very happy in the battlefield of business,” he says.
Fujii followed in his father’s footsteps when he joined Mitsubishi Bank in Tokyo as a loan supervision officer in 1969. Four years later he moved to the economic research division to train as an economist before being posted to New York in 1976. While in New York he was seconded to Salomon Brothers’ trading room as a trainee trader of US government bonds, the first Mitsubishi employee to be trained in the secondary market.
It wasn’t a particularly happy time. “I wasn’t really working for Salomon, it was more like being held captive,” he recalls. Fujii claims that Salomon didn’t give him a chair and he was forced to listen to traders’ conversations all day even though he had not been provided with a glossary of trading terms. “Traders really are different animals,” he says. “Their rumour and conversation is something else. And because only about 10% of their conversation was linked to trading they would hit me with their telephones and tell me to stop listening.”
But circumstances were soon to turn in his favour. Mitsubishi was about to issue a floating-rate certificate of deposit in the US and because Salomon happened to be chasing the deal Fujii says he noticed a huge change in attitude. “All of a sudden they gave me books to study the technical jargon,” he says. He looks excited and adds: “And they finally gave me a chair.” But despite his tales of hardship he is glad of the experience. “If you only take a look at the primary market you only see the baby’s face. In the secondary market you can see a deal go from birth to cradle to school,” he says.
In June 2000, Fujii was promoted to the position of CEO and president of Tokyo-Mitsubishi Securities, 31 years after he began his banking career. He refuses to be drawn as to whether he, or his counterpart, Nobuo Nakazawa, Kokusai’s CEO, will lead the merged entity through the integration. However, he does say: “We should act as partners no matter what the actual corporate structure is because even though the cultures are different, I really want to make this a success. But the taste of the merged institution, like a well blended whisky, will be better than the original, otherwise it wouldn’t make sense to do.”
