Daiwa Securities Group Inc. kicked off operations as a holding company Monday, placing four separate firms under its wing.
Members of the group, capitalized at 138.4 billion yen and with a staff of 400, include Daiwa Securities Co., which was reborn the same day as a brokerage firm specializing in stock brokering for individual investors in Japan. With capital of 100 billion yen and a payroll of 6,200, it will no longer deal with corporate clients.
Daiwa Securities SB Capital Markets Co. (Daiwa SBCM), another firm under the holding company, will focus on corporate customers for investment banking, derivatives and securitization business.
Daiwa SBCM was established earlier this month as a joint venture between Daiwa Securities Co. and Sumitomo Bank.
In the second reorganization phase, which is expected to take place within the next two years, Daiwa Securities Group will place the Daiwa Institute of Research and four more companies under its wing.
Yoshinari Hara, president of Daiwa Securities and chief executive officer of the newly established Daiwa Securities Group, said the reorganization marks the firm’s determination to survive the “Big Bang” deregulation and to prepare for the wider enforcement in fiscal 2000 of accounting on a consolidated basis.
“Each of the group firms needs to raise its profitability,” Hara told a news conference at the securities firm’s Tokyo branch. “To do that, the leadership of the holding company is crucial.”
Holding companies, which oversee the business strategies of their member firms, do not conduct business on their own and gain earnings from revenues from those firms.
On the fate of Daiwa Securities’ nearly 100 subsidiaries and affiliates, Daiwa Securities Group will add only profitable firms to the group, Hara said.
“It is no longer time to expand our business lines without solid prospects,” Hara said. “We will pick affiliates that will help raise our corporate value on a consolidated basis (to be included in the group).” Affiliates deemed unprofitable will either be consolidated, sold off or liquidated, Daiwa officials said.