Will Daiwa’s move help it to regroup?
Daiwa Securities Group, Japan's second-largest securities firm, aims to help overseas investment banks raise cash in Japan after they lost money on subprime- related investments.
Daiwa started research in the U.S. and Europe to find out which banks will need capital in the long term and how best to market their needs to investors in Japan and other markets, incoming Chairman Akira Kiyota said in a Bloomberg Television interview in Tokyo.
“We've just started throwing the ball” to overseas banks, Kiyota said in the interview on April 3. “We want to make the most of the fact that overseas banks have exhausted themselves, and financial assets in Japan remain untouched.”
Tokyo-based Daiwa is targeting Japanese individuals, who have 1,550 trillion yen ($15 trillion) of financial assets available to invest in securities products. Citigroup, Merrill Lynch & Co and other banks have so far relied on sovereign funds in Abu Dhabi and Singapore to seek more capital.
“The idea is fascinating,” said Mitsushige Akino, who oversees about $560 million in assets as chief investment officer at Ichiyoshi Investment Management in Tokyo. “One concern is that Japanese individuals may be insensitive to the risk. Overseas banks' shares could fall further, as we may only be halfway through the subprime crisis.”
Daiwa shares fell in Tokyo trading after the bank had its first quarterly loss in five years as the value of its holdings of fixed-income securities fell. The stock slid 2.5 percent to 903 yen.
Net income dropped 51 percent to 45 billion yen in the year ended March 31, the firm said in a preliminary earnings statement after markets closed last week, indicating a fourth-quarter loss of 14.3 billion yen.
Goldman Sachs Group, Ripplewood Holdings LLC, Cerberus Partners LP, Lone Star Funds and other overseas funds invested in Japanese companies when Japan's banks struggled with bad loans in the late 1990s and early 2000, and are recouping investments through initial public offerings or liquidating sales.
“It's the other way around this time,” Kiyota said. “We see a very big business opportunity here.”
Banks and securities firms worldwide are seeking additional capital after reporting at least $232 billion in subprime-related asset writedowns and credit losses since the beginning of 2007.
Lehman Brothers Holdings, the fourth-largest U.S. securities firm, said on April 1 it raised $4 billion from a share sale. UBS AG, Europe's biggest bank, said the same day it would seek a cash infusion of 15 billion francs ($15 billion) after a 12 billion franc loss linked to subprime mortgages.
Daiwa sees this as a chance to expand its global equity underwriting. The firm ranked second among underwriters of Japanese equity and equity-linked securities in 2007, behind Nomura Holdings, according to data compiled by Bloomberg.
Kiyota said his company can sell overseas banks' preferred shares to Japanese individuals and institutional investors, and arrange global equity or debt sales in Japan and other markets.
Will Japanese individuals prove to be insensitive to the risk?
Daiwa started research in the U.S. and Europe to find out which banks will need capital in the long term and how best to market their needs to investors in Japan and other markets, incoming Chairman Akira Kiyota said in a Bloomberg Television interview in Tokyo.
“We've just started throwing the ball” to overseas banks, Kiyota said in the interview on April 3. “We want to make the most of the fact that overseas banks have exhausted themselves, and financial assets in Japan remain untouched.”
Tokyo-based Daiwa is targeting Japanese individuals, who have 1,550 trillion yen ($15 trillion) of financial assets available to invest in securities products. Citigroup, Merrill Lynch & Co and other banks have so far relied on sovereign funds in Abu Dhabi and Singapore to seek more capital.
“The idea is fascinating,” said Mitsushige Akino, who oversees about $560 million in assets as chief investment officer at Ichiyoshi Investment Management in Tokyo. “One concern is that Japanese individuals may be insensitive to the risk. Overseas banks' shares could fall further, as we may only be halfway through the subprime crisis.”
Daiwa shares fell in Tokyo trading after the bank had its first quarterly loss in five years as the value of its holdings of fixed-income securities fell. The stock slid 2.5 percent to 903 yen.
Net income dropped 51 percent to 45 billion yen in the year ended March 31, the firm said in a preliminary earnings statement after markets closed last week, indicating a fourth-quarter loss of 14.3 billion yen.
Goldman Sachs Group, Ripplewood Holdings LLC, Cerberus Partners LP, Lone Star Funds and other overseas funds invested in Japanese companies when Japan's banks struggled with bad loans in the late 1990s and early 2000, and are recouping investments through initial public offerings or liquidating sales.
“It's the other way around this time,” Kiyota said. “We see a very big business opportunity here.”
Banks and securities firms worldwide are seeking additional capital after reporting at least $232 billion in subprime-related asset writedowns and credit losses since the beginning of 2007.
Lehman Brothers Holdings, the fourth-largest U.S. securities firm, said on April 1 it raised $4 billion from a share sale. UBS AG, Europe's biggest bank, said the same day it would seek a cash infusion of 15 billion francs ($15 billion) after a 12 billion franc loss linked to subprime mortgages.
Daiwa sees this as a chance to expand its global equity underwriting. The firm ranked second among underwriters of Japanese equity and equity-linked securities in 2007, behind Nomura Holdings, according to data compiled by Bloomberg.
Kiyota said his company can sell overseas banks' preferred shares to Japanese individuals and institutional investors, and arrange global equity or debt sales in Japan and other markets.
Will Japanese individuals prove to be insensitive to the risk?
posted by Charltonmedia.com @ 11:22 AM
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