Nikko Securities Co. and U.S. financial conglomerate Travelers Group Inc. plan to forge an alliance that will result in Travelers' acquiring a 25 percent stake in Japan's third-largest brokerage.
The announcement Monday by the two firms marked one of the most candid reactions to date of the wide-reaching effects of the government-initiated "Big Bang" financial deregulation, which is expected to tear down traditional practices and sentiment within the domestic financial industry.
"Our company has a lot of confidence in Japan and the long-term outlook for the economy, and the Big Bang will lead to growth in the marketplace," said Sanford Weill, chairman and chief executive officer of Travelers Group. The partnership will "bring together the best of both companies" and form a strategic alliance "second to none," he said.
Meanwhile, Nikko President Masashi Kaneko stressed that as the Big Bang proceeds and firms operate in an increasingly global environment, it has become more important to provide the best products and services available in every market if a brokerage hopes to stay on top of the competition.
Under Monday's agreement, Travelers will gain a 25 percent stake in Nikko through an equity stake of 9.5 percent after the private placement of new shares and another 15.5 percent through convertible bonds.