The function and organization of a bank holding company in Japan

Abstract

From 1999 to 2001, the Japanese financial industries were deregulated on a large scale in a move referred to as the "Japanese Big Bang". As a result, commercial banks are now allowed to establish a bank holding company and to diversify their financial services through this bank holding company. In 2000 and 2001, Japan's three major city banks each established a bank holding company with full-service securities companies as subsidiaries. In this context, this thesis examines the function and organization of bank holding companies that have subsidiaries that offer financial services, most of which have proven to be very effective, and that have maximized the total value of the group. Chapter One examines the various roles a holding company can play to create value. It considers research on corporate-level strategy and draws a parallel between the role of corporate headquarters in a diversified company and the role of the bank holding company in a diversified financial services company. Chapter Two analyzes the organization and structure of some of the world's leading bank holding companies. Chapter Three looks at the three major Japanese bank holding companies. Finally, Chapter Four compares the different approaches to creating value that have been observed in the case studies, and draws implications for value creation strategies in the Japanese bank holding companies in the future.