keiretsu unwinding

Doug Henwood dhenwood at
Tue Nov 9 04:43:16 PST 1999

Financial Times - November 9 1999

Nissan, IBJ, Fuji dispose of stakes By Alexandra Harney and Gillian Tett in Tokyo

Nissan Motor and its two main banks, the Industrial Bank of Japan and Fuji Bank, are to sell their large holdings of shares in each other, in a landmark example of the trend to unwind long-term corporate relationships in Japan.

The move is part of Nissan's ¥1,000bn (E9bn) restructuring plan designed by Carlos Ghosn, the chief operating officer seconded from the troubled carmaker's alliance partner, Renault.

It comes as Japan's banks are looking to reduce their shareholdings in companies amid a rapid consolidation of the financial sector. IBJ and Fuji recently agreed an alliance with Dai-Ichi Kangyo Bank to create the world's largest financial group.

The decision by these pillars of the Japanese business community sends a strong signal to others that the tradition of establishing privileged relationships with a few business partners and underpinning them with large reciprocal shareholdings is no longer vital in Japan.

This tradition led to the creation of large, powerful families of companies, known as keiretsu, whose members preferred to deal with each other, often to the frustration of outside competitors, especially non-Japanese ones.

Mr Ghosn has indicated that Nissan needs to hold shares in only four out of the nearly 1,400 companies whose stock it owns.

The company, which is owned 36.8 per cent by Renault, said it hoped to sell the shares as quickly as possible.

The carmaker owns 1.7 per cent of Fuji and 1.4 per cent of IBJ, together worth about ¥134.75bn at yesterday's share prices.

Analysts said that the unwinding would have a positive impact on the banking sector, following the injection of public funds into the banks earlier this year. "From the perspective of investing in the banks, this improves their capital efficiency," said one analyst.

IBJ and Fuji together own 8.7 per cent of the carmaker's shares, with a total market value of about ¥141.68bn at yesterday's share prices.

IBJ said it would not sell its entire 4.2 per cent stake. It was not clear whether the bank would sell shares in other Nissan group companies, such as Nissan Diesel.

Fuji, which holds a 4.5 per cent stake in Nissan or 114.96m shares, has indicated in recent weeks that it was reassessing its shareholdings partly as a result of its recent merger with IBJ and DKB.

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