Japan-US Business Report LogoJapan-U.S. Business Report

No. 344, May 1998

Issue Index

Japanese Companies in the US


FINANCIAL SERVICES

Second-tier regional banks continue their U.S. retrenchment. Among the latest to announce that they are ending local operations are BANK OF NAGOYA, LTD., which will close its New York City branch, its only one offshore, in late August and replace it with a representative office, and SHIGA BANK, LTD., which will shutter its Manhattan branch at the end of September, leaving a Hong Kong branch as the only overseas outlet.

Japanese financial services providers are trying to better position themselves to capitalize on the boom expected in asset management as a result of Big Bang financial reforms. For example, IBJ SCHRODER BANK & TRUST CO. acquired DELPHI ASSET MANAGEMENT, also headquartered in New York City, for an undisclosed amount. Delphi manages a reported $1 billion for both individual clients and institutions. It also operates a pair of hedge funds. Through its wholly owned INNOVEST CAPITAL MANAGEMENT subsidiary, IBJ Schroder also manages a number of hedge funds. Part of INDUSTRIAL BANK OF JAPAN, LTD., the company is engaged in commercial and private banking as well as trust and investment management. It handles an estimated $3 billion for clients. Delphi will operate as an independent subsidiary.

NOMURA SECURITIES CO., LTD. and BABCOCK & BROWN INC., a San Francisco-based global leasing and investment banking firm, have restructured a relationship forged in 1986. Babcock & Brown reacquired from Nomura Securities the 20 percent interest Japan's top brokerage house owned, while real estate management company NOMURA LAND AND BUILDING CO., LTD. bought out BBI's 20 percent stake in NOMURA BABCOCK & BROWN. That Japan-based business provides lease investments and other nonsecurities products to domestic investors. Although no reason was given explicitly for the change in the relationship, the former partners said that they would collaborate in the future when joint rather than individual actions made sense, such as leveraged and operating leases in Japan.

Meanwhile, in the largest such deal ever undertaken in the United States, the U.S. subsidiary of NOMURA SECURITIES CO., LTD. securitized loan claims held by its real estate affiliate into just over $3.7 billion worth of commercial mortgage-backed certificates. Institutional investors bought out the issue, for which MORGAN STANLEY DEAN WITTER & CO. was the lead underwritter, almost as soon as it hit the market. The securitized loan claims involved supermarkets, office buildings and housing complexes. More than 70 percent of the commercial mortgage-backed certificates represented bonds with a AAA credit rating.

Deciding to shed an unprofitable, noncore business, UNION BANK OF CALIFORNIA has agreed to sell its credit-card operation to FIRST NATIONAL BANK OF OMAHA. The deal is valued at $270 million or so, equal to the BANK OF TOKYO-MITSUBISHI, LTD. affiliate's outstanding credit- card liabilities.

The New York City subsidiary of HOSOKAWA MICRON CORP. — a producer of powder, particle, plastics and confectionery processing equipment and product recovery systems — filed a registration statement with the Securities and Exchange Commission for an initial public offering of more than 3.4 million shares. CREDIT SUISSE FIRST BOSTON CORP. and PAINE WEBBER INC. lead the underwriting syndicate.

An exchange rate of ¥132=$1.00 was used in this report.
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