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No. 353, February 1999

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Japanese Companies in the US


FINANCIAL SERVICES

Add SUMITOMO TRUST & BANKING CO., LTD. to the already long list of Japanese banks that are scaling back their American operations or even pulling out of the market as part of a much-needed restructuring strategy. Sumitomo Trust will consolidate all its U.S. business in its New York City branch, in the process closing two representative offices.

Japanese banks also continue to use their U.S. financial services units to raise money for restructuring. The latest to tap this source of capital is TOKAI BANK, LTD. The Nagoya-based commercial bank sold TOKAI FINANCIAL SERVICES INC. to an affiliate of a Dutch company for $410 million. The Berwyn, Pennsylvania office equipment leasing company had a net profit of $19 million in 1997.

In advance of NEW JAPAN SECURITIES CO., LTD. buying WAKO SECURITIES CO., LTD. in April 2000 to form Japan's fourth-biggest brokerage house, Wako Securities sold its Manhattan-based investment advisory firm to SUMITOMO LIFE INSURANCE CO. for $6.7 million. The renamed FARRELL-SL INVESTMENT MANAGEMENT, INC., which has been in business since 1991, will continue to manage money for its existing clients while strengthening its investment trust (Japanese-style mutual funds) operations in Japan.

Communications entrepreneurs have a new source of venture capital, CENCOM V SOURCING, INC. Formed by the main U.S. subsidiary of MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. along with a unit of Canada's largest telecommunications company and a pair of venture capital firms plus a venture consulting business, the Palo Alto, California firm will identify and start cutting-edge communications companies from their earliest and most risky phase. The partners are particularly interested in businesses that emerge from the convergence of telecommunications, electronic media and computer networking. MEI's recently opened Panasonic Digital Concepts Center in Cupertino, California (see Japan-U.S. Business Report No. 350, November 1998, p. 5) will provide expertise and assistance to CenCom V.

An exchange rate of ¥120=$1.00 was used in this report.aaaaaa

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