Masao Nishimura, IBJ: Japan's new leviathans
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Masao Nishimura, IBJ: Japan's new leviathans

They may be a decade late, but Japan's banks are finally restructuring. The headline deals will create the world's two largest banks. An exclusive interview with Masao Nishimura, president of IBJ and a prime mover in the recent combination of IBJ with Fuji Bank and DKB, gives an insight into the thinking of Japan's financial elite. But, as Simon Brady reports, bad debts, low profitability and economic malaise will prevent even these new giants from becoming world leaders.

IBJ's Nishimura has a revolutionary idea

Fuji's plan: first restructure, then expand

In June 1989, at the height of the Japanese asset price bubble, Euromoney celebrated its 20th birthday. It accompanied this landmark with a series of predictions about the state of the financial markets in 1999. One that has seemed laughable for many of the intervening years was that Japanese banks would dominate the global banking industry. Under the headline, "the $604 billion bank", we listed the keiretsu groupings of Sumitomo, Mitsubishi, Fuji and Dai-Ichi Kangyo, and argued that these groups would consolidate their many banking, leasing, insurance and asset management activities to become global financial hypermarkets.

For a time, Japanese banks did indeed top our rankings of the world's largest banks, at least by assets; in 1992 the top four were Sumitomo, DKB, Fuji and Sanwa. But they missed the great revolutions in disintermediation, in derivatives and risk management and in information technology that allowed their US, and to a lesser extent some European, competitors to claim the spoils that come with true global universal banking. To be fair, they also lacked the direct and indirect government help that bailed out a number of their key international rivals.

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