GLOBAL CORPORATE AND INVESTMENT BANKING

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GLOBAL CORPORATE AND INVESTMENT BANKING

  1. 1. GLOBAL CORPORATE AND INVESTMENT BANKING The Global Corporate and Investment Banking unit consists of four groups: the Corporate Finance Group and the Investment Banking Group, which are responsible for the major enterprise market at home and overseas; the Trading Group, which handles market business; and the Public and Financial Institutions Group. The unit thus enables us to offer customers one-stop access to high quality cross-border banking services that transcend the traditional boundaries between commercial and investment banking. Corporate Finance Group Strategy In developing and offering new products and services, we not only draw on our prod- The Group’s strategy is to exploit advanced uct development divisions but also enlist the financial technologies in developing compre- support of the entire Group, including securi- hensive proposals that match the business ties and trust banking subsidiaries. These strategies of each customer. efforts have paid off. We were successful in closing Japan’s first MBO and CBO transac- 1. Concrete strategies for the Japanese market tions. We were also among the first Japanese We are making every effort to strengthen our banks to offer settlement services to help one-stop approach to providing comprehen- major corporate customers increase the effi- sive services that satisfy the needs of large ciency of their funding operations and their Japanese and middle market Japanese corpo- procedures for collecting sales proceeds. rate customers on a worldwide bases. To this These services include debit cards and an end, we are building a varied and sophisti- Internet-based electronic settlement system cated line-up of financial products and called Fuji Cyber Bank, in which our high- services that employ not only traditional level information technology played a leading commercial banking skills, but also the role. We are the only Japanese bank to have advanced financial techniques and informa- joined the Interactive Business Operating System tion technology of the investment banking (IBOS), which allows us to fulfil a need for cross- business. At the same time, we are working to border cash flow management services. develop the all-round competence necessary Meanwhile, the number of customers making for planning tailor-made proposals to match use of the pension consulting services offered individual customers’ business strategies. by Fuji Research Institute Corporation is To give a more specific example, we iden- increasing in response to the revisions occur- tify financial and capital issues of the cus- ring in the accounting principles governing tomer based on their business strategy. We company pensions. then provide services such as calculating the On the organizational side, the corporate value of their business using cash flow analy- banking divisions serve corporate customers in sis and other financial services that will meet major cities and collect information on specific the customer’s requirements. industries as well as know-how that will help satisfy customers’ needs with precision. Japan’s industry is going through a period of unprece- dented structural change, and many of our cus- tomers are actively joining alliances and undertaking strategic restructuring of their businesses. To strengthen our sector-by-sector approach, we have reorganized to concentrate 20
  2. 2. Review of Operations responsibility for multimedia and data With regard to the business with non- communications customers into the Head Japanese customers, we exploited our domes- Office Corporate Banking Division V, and tic strengths in expanding transactions with put the International Business Division in Japan-based foreign companies. charge of foreign companies operating in To further enhance the efficiency of our Japan. operations, we aggressively reorganized our overseas network, integrating 16 branches 2. Concrete strategies for overseas and representative offices in fiscal 1998. markets In fiscal 1999, we shall continue to sharpen Fiscal 1998 was a year in which the busi- the focus of our overseas operations and make GLOBAL CORPORATE AND ness environment surrounding us rapidly more aggressive use of advanced financial changed as international rating agencies techniques and know-how from overseas in downgraded Japanese banks. We responded by the domestic market. At the same time, we drastically reorganizing our international oper- shall move ahead with our ongoing measures ations to focus on certain key businesses. First, to cut costs and improve the efficiency of our we concentrated on our main strengths in for- organization and management, with special eign markets - transactions with Japanese emphasis on restructuring our international companies operating overseas and investment network. With regard to the latter in particu- INVESTMENT BANKING banking operations such as acquisition finance lar, we are creating a business promotion sys- and project finance - with a view to achieving tem whose focal points are strategically placed top bank status in these areas. We ranked in New York, London, Singapore and Hong among the top 15 major banks in providing Kong so as to enable us to promote business finance to the acquisition finance markets in in line with market needs in the American, America and Europe. In the area of project European and Asian markets. finance, we succeeded in securing substantial The Corporate Finance Group must financial advisory business and played the role actively engage in international operations if of arranger in setting up financing for the TRI we are to survive the competition with major ENERGY power generation project in international banks and become a leading Thailand. These and our achievements in bank in the 21st century. We are firmly putting together loan syndicates have earned resolved to continue concentrating our ener- us a very good reputation in the markets. gies in certain key sectors while at the same The experience in providing new types of time giving domestic customers full access to products in advanced overseas financial mar- new financial techniques and know-how kets, as well as financial techniques and know- from abroad. how acquired in markets outside of Japan have been actively utilized in our domestic business. In the United States, we were the first Japanese bank to close an arbitraged-type CLO (collater- alized loan obligation) management transac- tion, while at home we successfully arranged the financing for the first full-scale MBO (man- agement buy out) to take place in Japan. 21
  3. 3. Global Corporate and Investment Banking Investment Banking Group Strategy We have rein- forced our ability to The Group’s goal is to become a leading offer products in the bank in the new millennium by offering areas of securitiza- superior products that meet a wide range tion, M&A and pro- of requirements. ject finance. The environment facing The Investment Banking Group offers customers has advanced, borderless services designed to changed dramati- meet the variety of customer requirements. cally, especially One of the objectives of our recently- because the intro- adopted new management structure is to duction of new accounting standards has ensure that the Investment Banking Group increased the need for balance sheet controls. and the Corporate Finance Group work This has spurred us into developing new together seamlessly to satisfy the diversifying businesses such as structured financing, needs of major enterprises and promising which focuses on cash flow and the risks hid- growth companies through a wide range of den in the balance sheet. superior products and services. There are many other areas in which we The cornerstone of Japan’s Big Bang finan- can draw on the overall strengths of the Fuji cial reforms is the complete deregulation of Bank Group and offer services through sub- commissions on securities transactions, which sidiaries at home and overseas. For example, is due for implementation in the fall of 1999. Fuji Securities Company serves various Most people expect competition to be so tough issuers of bonds, securities and IPOs, while thereafter that only a few winners will sur- Fujigin Capital Company provides capital for vive. The investment banking business is corporate start-ups. As the regulations on likely to become one of the most contentious maintaining firewalls between banks and of the Big Bang battle zones. However, we see their securities subsidiaries are eased, the it as an integral element in our program to shift towards direct corporate financing will become a customer-oriented, one-stop bank accelerate, leading to environmental changes and give us the momentum to succeed in the in which MBOs, CBOs and other new financ- 21st century. ing methods will flourish. The Investment Banking Group is committed to coping with these changes by strengthening cooperative ties with affiliates as a means of creating an organizational structure that can better sat- isfy the increasingly diverse and sophisticated requirements of customers. Trading Group Strategy The Group’s strategy is to use its sophisticated trading techniques and strengths in numeri- cal analysis to become an increasingly active participant in the credit products market. 22
  4. 4. Review of Operations GLOBAL CORPORATE AND The Bank is a leading player in the interest, The Bank specializes in investment bank- exchange, derivatives and other markets, and ing fields like project finance, and the Group INVESTMENT BANKING the Trading Group fulfils a key role in works together with investment banking divi- responding attentively to customers’ needs on sions to satisfy our customers. the one hand and earning profits on the other. The pace of change in this sector is dizzy- 2. Strategies for financial institutions ing, so it is absolutely essential that we con- Progress in introducing the Big Bang reforms stantly devise new trading tools that will of the Japanese financial system means that enable us to meet customers’ funding, invest- the transactional relationships between ment and hedging needs. financial institutions are far broader than Based on our sophisticated trading know- they used to be. how and skills in numerical analysis, we are Financial institutions have a growing need actively developing new types of interest- and for risk-hedging instruments and techniques exchange-based products. We are also active for making profitable investments at a time of in the markets for credit-related products such extremely low-interest rates in Japan. We are as credit derivatives, CBOs and CLOs, which working to deal with these requirements we expect to grow steadily in the future. through investment banking operations that With the introduction of the new account- include the provision of market-related prod- ing standards from fiscal year 2000, a high ucts and services such as derivatives and level of risk management will be required asset-backed securities. even more. Therefore, we are working to We are also putting a great deal of effort enhance and diversify our trading techniques. into providing products and services that For example, we have started research and exploit the Fuji Bank Group’s specialist development work on multi-product trading know-how in many areas, particularly those methods that allow simultaneous transactions that meet the needs of financial institutions covering interest rates, bonds, exchange and for out-sourcing services. equities. Public and Financial Institutions Group Strategy The Group’s strategy is to utilize its specialist expertise in responding to its customers’ needs. 1. Strategies for public institutions The Group’s primary mission is to provide reliable handling of operational procedures relating to public money. We also believe we have an important role to play in dealing with more recent funding requirements. These include new fund-raising methods like Private Finance Initiatives (PFIs), which have been very much in the limelight recently, even in the public finance markets. 23

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