For several years after World War II, the plain seven-story red-brick building that stands on the north bank of the Kanda River in Tokyo's Nihonbashi district housed a women's unit of General MacArthur's Occupation Army. On the outside, nothing distinguishes the building from other office blocks in the Japanese capital. Inside, employees toil elbow to elbow in open work areas illuminated by fluorescent lights, and the air is heavy with cigarette smoke. Yet the modest facade masks the nerve center of a powerful financial empire: Nomura Securities, the largest, richest and most profitable securities firm on earth.
With Japan riding high as a premier economic power, no company stands a better chance of dominating global finance than Nomura. The company, building on a powerful domestic base, is a behemoth. Its assets ($372 billion) surpass those of Citicorp ($204 billion) and Merrill Lynch ($55 billion) combined. Nomura's 1987 profits ($2 billion) were almost four times those of American Express. And as Japan converts manufacturing muscle into financial might, the securities giant has passed Toyota (1987 earnings: $1.7 billion) to become the country's most profitable company. No wonder Nomura sparks respect in its competitors, inspires hard work and ambition among its 12,000 employees, and commands the loyalty of its 5 million customers.
Today, with 38 offices in 21 countries, Nomura is increasingly showing its muscle on foreign ground. Six years after establishing a full-fledged subsidiary in London, it ranks No. 1 in the Eurobond market, having overtaken the likes of Deutsche Bank and Credit Suisse First Boston. Nomura controls investment or commercial banks in Britain, Australia, Switzerland, Singapore and Bahrain. In the U.S. it is a major dealer in Treasury issues and holds a seat on the New York Stock Exchange. In The Second Wave: Japan's Global Assault on Financial Services, Authors Richard W. Wright and Gunther A. Pauli put it this way: "Nomura stands alone as a giant among giants, a colossus whose stated goal is to be everything to everybody everywhere in the financial services business."
Nomura took a giant step toward realizing that goal last week, stunning Wall Street with a move to become a major player in the U.S. mergers-and- acquisitions game. The company said it was paying $100 million for 20% of the hot, new Manhattan investment firm started six months ago by Bruce Wasserstein and Joseph Perella, the Wall Street wizards who built First Boston's merger department into one of the best in the business and then left to strike out on their own.
Wasserstein, Perella has already managed about $19 billion worth of mergers and acquisitions, including the $6.6 billion purchase of Federated Department Stores by Canadian Developer Robert Campeau. Teaming up with the U.S. firm, Nomura can gain expertise in merger making and help its Japanese clients acquire U.S. companies. For Wasserstein, Perella the deal provides both an infusion of capital and global connections. Says Perella: "No other single alliance could give us the comprehensive reach that the Japanese connection we have with Nomura could."