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As US Firms Stumble, Japanese Banks Step Up

Failing only a few years ago, Japanese institutions rescuing US system

By Clay Dillow, Newser Staff

Posted Sep 23, 2008 11:27 AM CDT

(Newser) – Japan's big banks, themselves near collapse a few years ago, are reemerging as global powerhouses, Reuters reports, just in time to snap up stakes in foundering US banks.They've largely escaped Wall Street's credit meltdown by shying away from riskier investments since their own "near death," when they were rescued by massive injections of public funds.

Japanese banks’ overseas acquisitions have already reached $12.5 billion this year. Investment giant Nomura Holdings struck a $525 million deal for Asian arm of Lehman Bros., and is said to be close to a deal for Lehman's European assets. Mitsubishi UFJ Financial is snatching up as much as 20% of Morgan Stanley for $8.5 billion, and speculation swirls that Goldman Sachs will seek refuge with Sumitomo Mistui Financial Group. Goldman owns shares in SMFG, and in the 1980s an earlier incarnation of SMFG helped bail out Goldman.

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Morgan Stanley said Monday it signed a letter of intent to sell up to 20 percent of the company to Mitsubishi UFJ Financial Group Inc. (AP Photo/Mark Lennihan)

Lehman Brothers has sold its North American banking business to Barclays and its Japanese and Australian units to Nomura Holdings Inc., (AP Photo/Shizuo Kambayashi)

In this May 22, 2006 file photo, a young couple pass by the head office of the Mitsubishi UFJ Financial Group Inc. in Tokyo. (AP Photo/Koji Sasahara, File)

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I don't think anyone imagined a few months ago that Mitsubishi would be making Morgan Stanley into a group firm. I don't think they could have imagined it themselves. - Shinichi Ina, banking analyst at Credit Suisse in Tokyo

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As US Firms Stumble, Japanese Banks Step Up