Not everyone in New York, Washington and London was quite so underwhelmed by Friday’s announcement that Dai-Ichi Kangyo, Fuji and Industrial Bank of Japan would combine to form a behemoth with $1.3 trillion in assets. Lincoln, after all, is the guy who published a famously pessimistic essay entitled “Japan’s Financial Mess” in Foreign Affairs 16 months ago. And even Lincoln acknowledges that Japan has made real progress since he suggested that maybe U.S. officials should just stop returning Japanese phone calls. A major bank has been nationalized, a $60 billion recapitalization program is underway and the new Financial Revitalization Commission looks genuinely tough. It’s enough to make some observers downright optimistic. “Restructuring is getting serious,” says Jason James, an international investment strategist at HSBC in London. “This deal is clearly a landmark.”
Well, call it a potential landmark. Though still a global also-ran, the new bank will have the range of skills–investment, corporate and retail banking–to defend its home turf from foreign banks. It promises to spend $1.34 billion a year on information technology, an area where Japan’s banks badly lag. But consolidation will come at a very Japanese pace, with staff reductions mostly through attrition; so much for global profitability standards. Since the merger is expected to trigger other deals, change may yet accelerate. But for Lincoln, and for many other observers, much remains to be seen.
