NONBANKING FINANCIAL SERVICES FIRMS
NONBANKING FINANCIAL SERVICES FIRMS
So far we have discussed debt and equity markets available to MNEs as well as the international banks that provide financial services. But there are a number of other financial-services firms in addition to banks that provide financial services for MNEs. Sometimes the distinction between banks and financial-services firms that deal in the securities markets (both debt and equity) is unclear because of differences in different countries' regulations. For example, the United Kingdom does not require a separation of commercial and investment banking, whereas both Japan and the United States do. As Table 9.6 shows, there is only one British firm among the twenty-five largest securities and financial-services firms. This is so primarily because U.K. banks can engage in both commercial and investment banking.
Firms often behave very differently abroad than they do at home. Thus Japanese and American commercial banks are heavily involved in securities work abroad, although that is prohibited at home.
In looking at Table 9.6, note the importance again of the U.S. and Japanese firms. In 1980 Nomura ranked twentieth in the Eurobond lead manager league tables and was relatively small in the United States and Europe. However, the speed with which it has attacked the world markets since 1986 is amazing. Nomura, the most powerful financial institution in Japan, is expected to become the largest in the world during the 1990s.43 Euromoney iden-
tines it as the firm that has had the greatest impact on capital markets in the 1980s. It is currently the lead manager of all international issues in the world, and four of the top five lead managers are Japanese securities firms.
One of the remarkable things about the Japanese securities firms is their profitability. Although Table 9.6 does not contain profits data for the Japanese firms due to a change in fiscal year-end in that survey, there are good data for 1988. In 1988 the estimated profits of the six largest U.S. securities firms were $1.9 billion, but the four largest Japanese firms listed profits of $3.9 billion. In the fall of 1989 the 50 largest U.S. financial institutions had a combined market capitalization of $95 billion, whereas the 13 largest Japanese financial institutions had a combined market capitalization of $500 billion. This gives the Japanese firms tremendous financial leverage for the future.
So far we have discussed debt and equity markets available to MNEs as well as the international banks that provide financial services. But there are a number of other financial-services firms in addition to banks that provide financial services for MNEs. Sometimes the distinction between banks and financial-services firms that deal in the securities markets (both debt and equity) is unclear because of differences in different countries' regulations. For example, the United Kingdom does not require a separation of commercial and investment banking, whereas both Japan and the United States do. As Table 9.6 shows, there is only one British firm among the twenty-five largest securities and financial-services firms. This is so primarily because U.K. banks can engage in both commercial and investment banking.
Firms often behave very differently abroad than they do at home. Thus Japanese and American commercial banks are heavily involved in securities work abroad, although that is prohibited at home.
In looking at Table 9.6, note the importance again of the U.S. and Japanese firms. In 1980 Nomura ranked twentieth in the Eurobond lead manager league tables and was relatively small in the United States and Europe. However, the speed with which it has attacked the world markets since 1986 is amazing. Nomura, the most powerful financial institution in Japan, is expected to become the largest in the world during the 1990s.43 Euromoney iden-
tines it as the firm that has had the greatest impact on capital markets in the 1980s. It is currently the lead manager of all international issues in the world, and four of the top five lead managers are Japanese securities firms.
One of the remarkable things about the Japanese securities firms is their profitability. Although Table 9.6 does not contain profits data for the Japanese firms due to a change in fiscal year-end in that survey, there are good data for 1988. In 1988 the estimated profits of the six largest U.S. securities firms were $1.9 billion, but the four largest Japanese firms listed profits of $3.9 billion. In the fall of 1989 the 50 largest U.S. financial institutions had a combined market capitalization of $95 billion, whereas the 13 largest Japanese financial institutions had a combined market capitalization of $500 billion. This gives the Japanese firms tremendous financial leverage for the future.
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