Unscathed Japanese banks on the prowl

Now that it’s come to light that Barclays went hat in hand to Japan to recoup some of the losses from its credit writedowns, one begins to understand that the Japanese banks are in a much better position today than their western counterparts. After years of recovering from their own property and stock market boom to bust, the Japanese banks are fitter and on the prowl again. The Times of London has picked up this issue.

Japan has given its official blessing to a new mood of aggression in its banking sector as the country’s powerful financial institutions turn their sights on deals with the outside world.

Yoshimi Watanabe, Japan’s Minister for Financial Services, told The Times that because the nation’s biggest banks had so far emerged from the sub-prime crisis relatively unscathed, they were well-positioned to adopt a bolder stance over deals with Western counterparts.

Speaking only hours after it was revealed that Barclays is negotiating a 100 billion yen (£480 million) capital infusion with Sumitomo Mitsui Banking Corporation, Mr Watanabe said that the new aggressive attitude of Japanese financial institutions “is a change that should be very much welcomed”.

The Times of London, 21 Jun 2008

One wonders whether the Japanese banks have any appetite for foreign takeovers. Given their recent history getting in over their heads with foreign investments, it would be understandable for the Japanese to exercise extreme caution in moving abroad. However, bank stocks are getting very cheap and now might be a good time for a little M&A. With bank deal volume at a crawl, I’m sure some enterprising bankers are peddling these ideas to Japanese banks right now.

  1. California_Dreamin says

    You wrote on June 13, 2008 that:

    “The Japanese Problem is that of an economy which succumbed to a bubble economy in the 1980s and two decades later has still not fully recovered. The Bank of Japan (BoJ) and the Japanese government have managed all manner of stimuli in the last 15 odd years, all to no avail. Japan still suffers from deflation, has a massive government deficit and debt, and has a fragile banking system and economy.”

    Your present post seems to contradict that. I’ve lived in Japan for the last 20 years and I can attest that Japan’s banking system and economy are anything but fragile. Have you read or listened to Eamonn Fingleton at all?
    If not, I recommend having a look at his website at http://www.unsustainable.org.

    1. Edward Harrison says

      You’re right that these statements are at odds. The sentiments expressed in this post are indeed more accurate. If you’ve read Richard Koo’s recent Book, he says much the same that you do. Thank you for the link.

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