Japanese Nomura Securities Longs for the Past

Japanese Nomura Securities is confronting a crisis as it loses the No. 1 spot in the securities businesses in Japan, which it has maintained for 40 years, to tough competition in U.S. Wall Street.

The Wall Street Journal announced on the 8th that Nomura Securities fell behind Salomon Smith Barney, whose controlling shareholder is Citigroup in Wall Street, in its performance in inviting public purchase of new stocks, and Goldman Sachs and Merrill Lynch in its performance in advising mergers and acquisitions.

Nomura Securities has been the symbol of Japanese economy, established 130 years ago as early as in 1872, although its official establishment date is 1925. It faced difficulties when it became embroiled in the scandal of providing privileges to public officials and yakuzas, but still remained strong enough to make a net profit around 2 trillion won in March 2000.

Nomura Securities` dominance has been eaten away bit by bit by Wall Street companies which made inroads into Japan after the financial market opening in 1998.

The business performance of Nomura Securities in attracting new stock purchases last year was about 1 trillion 270 billion won, which is half of what No.1 ranked Nikko Salomon made. It ranked 9th in the number of orders received for sale and charge of foreign companies.

A factor in the turnout is the rush of Wall Street companies in mediating increasing number of sales of Japanese companies, which is caused by recession. The Wall Street Journal reported that foreign companies sometimes handled up to half of the volume of stock exchange in Japan.

The Journal pointed out, "One third of the stocks in Japanese financial market submerged under ground because companies just held large amounts of company stocks. Individuals also held assets in the form of gold or bank accounts, which retarded the growth of securities and bond market."

The Journal added that the active business of Wall Street companies could provide the catalyst for maximizing the potential power of the assets by activating Japanese market of securities and bonds.

But Nomura Securities, which is still No. 1 in the total performance of business, sneered saying, "The companies of Wall Street will leave with just the commissions." An official said, "The challenge that Wall Street poses is not so serious, although the rank shifted due to some big deals falling into the hands of Nikko Salomon last year."

Eun-Taek Hong euntack@donga.com