Opening Japan's banks

Opening Japan’s banks

Murphy C. Far Eastern Economic Review, November 2006, Vol. 169 No. 9, Start page: 47, No. of pages: 3

Purpose – to report an interview with Thierry Porte of Shinsei Bank on the future prospects for Japan’s banks. Design/methodology/approach –notes the extent of the challenges that have faced Japanese banks over the last decade, characterized as “the most disastrous in Japan’s banking history”. Comments that the system may now be in a stronger position than it has been for 20 years. States that banks’ future financial health depends on the extent to which they can increase sources of non-interest income and discusses which services consumers may be prepared to pay for and which should be free. Reviews Shinsei’s recent performance and its evolution into a niche investment bank from its previous incarnation as the Long Term Credit Bank of Japan, widely seen as synonymous with Japan’s non-performing loan problem. Comments on ongoing corporate governance issues, the limited success experienced by shareholder activists and the need for a formal takeover code in Japan. Expresses some optimism about prospects for international expansion in areas where Japanese banks have a clear competitive advantage and for domestic growth opportunities in real estate finance and securitization and in providing retirement and individual financial services. Predicts that in a decade from now Tokyo will be one of several important Asian financial centres, reserving judgement on whether Japanese banks will be sufficiently motivated to make the changes necessary to remain competitive. Originality/value – one of a selection of articles published in this issue of the Review, dealing with the future of Asia over the next ten years.

Keywords: Banking, Corporate governance, Debt financing, Japan,Strategic choices