Nomura & Mitsubishi UFJ Buy American
"Recent transgressions in financial markets have underscored the fact that one can hardly overstate the importance of reputation in a market economy..."
Alan Greenspan
Former Federal Reserve Chairman (speech 2004)
After the humiliation close to 10-years ago when the Japan premium forced Japanese banks and brokers to adjust to a new world involving a higher cost of borrowing, the big boys are back! Earlier in September, Nomura agreed to buy Lehman's European and Asian operations after it filed for bankruptcy. How this impacts their prime brokerage business is as yet unknown.
Up to now Nomura has quitely but agressively built up its synthetic prime brokerage business in addtion to its DMA (direct market access) accounts through a previous acquisition of a major electronic platform. Critical will be the ability of the firm to build up its book of accounts especially with global multi-strategy shops based out of London and Hong Kong where Lehman had some market penetration.
On the other hand, major money-center bank, Mitsubishi UFJ agreed to pay a reported US$9 billion to purchase up to 21% stake in Morgan Stanley. This might be a mojor coup given Morgan's preeminence in various league tables servicing hedge funds around the world. However, with capital and leverage now drastically being cut back just how much of Morgan's business Mit-UFJ will be able to sustain remains a big unknown. The business model is broken and no-one knows for sure how the landscape will change. Mahalo.
"Recent transgressions in financial markets have underscored the fact that one can hardly overstate the importance of reputation in a market economy..."
Alan Greenspan
Former Federal Reserve Chairman (speech 2004)
After the humiliation close to 10-years ago when the Japan premium forced Japanese banks and brokers to adjust to a new world involving a higher cost of borrowing, the big boys are back! Earlier in September, Nomura agreed to buy Lehman's European and Asian operations after it filed for bankruptcy. How this impacts their prime brokerage business is as yet unknown.
Up to now Nomura has quitely but agressively built up its synthetic prime brokerage business in addtion to its DMA (direct market access) accounts through a previous acquisition of a major electronic platform. Critical will be the ability of the firm to build up its book of accounts especially with global multi-strategy shops based out of London and Hong Kong where Lehman had some market penetration.
On the other hand, major money-center bank, Mitsubishi UFJ agreed to pay a reported US$9 billion to purchase up to 21% stake in Morgan Stanley. This might be a mojor coup given Morgan's preeminence in various league tables servicing hedge funds around the world. However, with capital and leverage now drastically being cut back just how much of Morgan's business Mit-UFJ will be able to sustain remains a big unknown. The business model is broken and no-one knows for sure how the landscape will change. Mahalo.
posted by Franklin Scruggins | 8:56 AM
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