| Japan Corporate News Network |
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| Nikko Citi CEO Welcomes Japan's Financial Revival |
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Tokyo, Oct 22, 2008 (Jiji Press) - Douglas Peterson, head of Nikko Citi Holdings Inc., said he welcomes recent signs of revival of the Japanese financial industry, as Japanese banks have largely rid themselves of bad debt, gradually improved profit margins and mostly avoided the U.S. subprime mortgage mess.
"I'm very encouraged by the stability of the Japanese financial sector and a positive role the Japanese financial sector is playing in the current tumultuous markets," said Peterson, chairman and chief executive officer of Nikko Citi, in a
recent interview with Jiji Press at the Japan Society.
Peterson showed little concern about the prospect of having to compete with Japanese financial firms that are strengthening their operations through partnerships with U.S. investment banks.
Nomura Holdings Inc. <8604> has recently acquired the Asian, European and Middle Eastern operations of failed Lehman Brothers, while Mitsubishi UFJ Financial Group Inc. <8306> has invested 9 billion dollars to acquire a 21 pct stake in Morgan Stanley.
These partnerships are expected to boost the standings of Nomura and Mitsubishi UFJ overseas, especially in the field of investment banking.
"These companies are already very competitive. They will be more competitive," Peterson said. But he quickly added that "it's actually positive for the market to have a strong competition," because it drives Nikko Citi to strive to be more innovative and competitive.
Nikko Citi was established in May through the combination of Citigroup Japan
Holdings Ltd. and major Japanese brokerage house Nikko Cordial Corp.
Nikko Citi's main strength is its global reach, thanks to its New York-based parent, Citigroup Inc., which has more than 3,000 branches outside North America, the world's largest for a financial firm. This has allowed Nikko Citi to offer unique financial products not available at Japanese banks, which primarily provide customers with savings products yielding less than one pct annually in returns.
Citigroup's global network has also allowed its Japanese unit to provide foreign exchange and cash management services for Japanese companies operating globally. "Through the network we have at Nikko Citi and Citigroup, we are very confident that we have a strong franchise to meet the needs of customers," Peterson said.
Peterson said Nikko Citi intends to focus on the retail business, reversing Citigroup's past focus on serving corporate clients and wealthy individuals in Japan.
The shift was apparently prompted by the global credit crisis that has caused hundreds of billions of dollars in losses at investment banks worldwide and brought the merger-and-acquisition activities to a standstill.
"Japan has been a great source of stability in our earnings and in our ability to access capital" at a time of worldwide credit freeze, Peterson noted. Citigroup is planning to raise 315 billion yen in Japan by issuing yen-denominated bonds designed for retail investors, in what is set to be the largest corporate debt offering in Japan.
Peterson brushed aside speculation that Citigroup might sell Nikko Cordial to help pay for subprime losses. "Citigroup has a very long-term commitment to the Japanese market. And a super-strong commitment to Nikko Cordial," he emphasized.
Copyright © 2010 JCN. All rights reserved. A division of Japan Corporate News Network KK.
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