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Daiwa pins hopes on a big idea

Daiwa has to do something – and everybody knows it; a bold ambition to become a global advisory mid-market leader leapt forward with the recent acquisition and merger of two leading US M&A boutiques, but can Daiwa really deliver globally?


Daiwa Securities president and chief executive Seiji Nakata

Daiwa, it is commonly accepted, faces challenges tough even by the gruelling standards of Japanese banking

It is eight and a half years since it announced its intention to buy itself out of its joint venture with Sumitomo Mitsui Banking Corporation (SMBC), and ever since then it has faced questions about its future. It has a powerful (although second-best) retail distribution network in Japan but faces challenges at every turn.

Just how bad is it for Daiwa? In a strong year for Japan’s economy, Daiwa reported a 28.9% quarter-on-quarter drop in profits in its most recent results, for the third quarter, and a 9.4% year-on-year drop for the first three quarters, as a provision for litigation torpedoed its momentum. 

President and chief executive Seiji Nakata talks about evolution and history, about innovation and stability. But questions swirl in Tokyo about the firm’s relevance, visibility and its long-term independence. 

“Daiwa has its retail distribution – and that’s really the only thing of true value,” says one investment banker in Tokyo. “The end game must be for it to merge with someone who wants that.”

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