After almost two frozen decades, Japan is back. From the Financial Times:
Mitsubishi UFJ said on Monday it had agreed to take a stake of between 10 and 20 per cent in Morgan Stanley, in a deal potentially worth $9bn, becoming the latest Japanese bank to benefit from the turmoil in western financial markets.
Announcement of MUFG’s investment in Morgan Stanley came only hours after Nomura, Japan’s largest broker, announced it would acquire Lehman Brothers’ operations in Asia and was in exclusive talks to buy parts of its operations in Europe.
Mizuho earlier this year invested $1.2bn in Merrill Lynch, while SMFG also invested about $1bn into Barclays.
MUFG recently paid $3.5bn to take 100 per cent control of Union Bank of California, in which it already had a 65 per cent holding.
In the 1980s, four of the world’s largest banks were from Japan, as were the planet’s biggest insurance company, stock market, and advertising firm. In 1989, however, wild market speculation contributed to a “lost decade” characterized by deflation, bank insolvency, lack of domestic investment, and a weak overseas presence.
The bubble finally bottomed out in 2003. Now, Japan’s economy is clearly on the up-and-up again, thanks to the US crisis. Japan has traditionally held massive capital reserves. By snapping up ailing US investment banks with existing money, Japanese banks are strengthening their strategic positions overseas and poising themselves for growth.
As they say, one man’s trash is another man’s treasure. Japan is using a prime opportunity from the subprime mess to once again make its presence felt as a world economic power.