The Industrial Bank of Japan, Limited (IBJ), based in

Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, with an estimated 37.46 ...

Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...

, was one of the largest

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

s in the world during the latter half of the 20th century. It combined with

Dai-Ichi Kangyo Bank , abbreviated as , was one of the largest banks in the world during the latter half of the 20th century. Dai-Ichi Kangyo Bank was created in 1971 by a consortium of two banks: Dai-Ichi Bank, Japan's oldest bank, and Nippon Kangyo Bank, a state fi ...

and Fuji Bank in 2002 to form

Mizuho Financial Group , abbreviated as MHFG, or simply called Mizuho, is a banking holding company headquartered in the Ōtemachi district of Chiyoda, Tokyo, Japan. The name "" literally means "abundant rice" in Japanese and "harvest" in the figurative sense. Upo ...

History

IBJ was founded as a public-sector bank under the ''Industrial Bank of Japan Act'' of 1902. At that time, Japan was in the throes of its

industrial revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 to about 1820–1840. This transition included going f ...

, and there was a strong demand for long-term

investment Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...

capital. IBJ raised funds by issuing bank debentures. IBJ also acted as the trustee in corporate

debenture In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowle ...

issues - notably, the major Japanese railway company issue of 1906 in

London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...

, amount to the then-enormous sum of 1 million pounds sterling. These activities contributed to the building of the Japanese domestic securities market, and to the generating of a higher profile for Japanese borrowers in the international market. This early experience of a sophisticated mix of corporate and

investment banking Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated with ...

with exposure to trust work is unique to IBJ amongst Japanese banks. In the original Act, there was the wording, “Trust business related to

local government Local government is a generic term for the lowest tiers of public administration within a particular sovereign state. This particular usage of the word government refers specifically to a level of administration that is both geographically-loc ...

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemical ...

, corporate bonds, and

equities In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

”. This was the first time for the term “trust”, or , to appear in the Japanese statute book. The 1918 amendment to the IBJ Act permitted the

underwriting Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabili ...

and offering of equities. At that point, IBJ had the full capabilities for what is now termed investment banking. However, that was at what proved to be the peak of the demand created for Japanese products by the

First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

and the consequent economic boom. Thereafter, the next 30 years of Japanese history encompassed many adversities for society in general and for financial institutions in particular: the

Great Kantō earthquake Great may refer to: Descriptions or measurements * Great, a relative measurement in physical space, see Size * Greatness, being divine, majestic, superior, majestic, or transcendent People * List of people known as "the Great" *Artel Great (born ...

, the Showa Financial Panic, and finally, the

Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...

and the postwar recovery. IBJ became a private-sector bank in 1950 and took on legal form under the ''Long-Term Bank Act'' of 1952. However the Act was framed within the terms of the US-led Occupation policy of compartmentalizing financial services. IBJ was forced to retreat from much of its former investment banking activities and return principally to long-term lending funding by issuing bank debentures. During the high-growth period of the Japanese economy in the 1960s, IBJ was particularly active in financing

steel Steel is an alloy made up of iron with added carbon to improve its strength and fracture resistance compared to other forms of iron. Many other elements may be present or added. Stainless steels that are corrosion- and oxidation-resistan ...

production,

shipping Freight transport, also referred as ''Freight Forwarding'', is the physical process of transporting commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it has been ...

shipbuilding Shipbuilding is the construction of ships and other floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to bef ...

, and

automobile A car or automobile is a motor vehicle with wheels. Most definitions of ''cars'' say that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people instead of goods. The year 1886 is regarded ...

manufacturing. Following the first oil crisis, Japan moved to a pattern of lower growth as a mature economy, and IBJ expanded its customer base at home, and started the process of expansion overseas. In Japan, the wholesaling of bank debentures to major financial institutions and the regional banks led to a network of strong relationships. This was all supported by the fact that, originally a public-sector bank, IBJ had no

keiretsu A is a set of companies with interlocking business relationships and shareholdings. In the legal sense, it is a type of informal business group that are loosely organized alliances within the social world of Japan's business community. The '' ...

affiliations: IBJ has always been independent of the large corporate groupings characteristic of Japan and was hence number 2 banker to each and all of the major keiretsu groupings. Internationally, IBJ was free to pursue its investment banking ambitions.

References

{{Authority control Banks disestablished in 2002 Companies formerly listed on the Tokyo Stock Exchange Companies formerly listed on the London Stock Exchange Defunct banks of Japan Mizuho Financial Group Banks established in 1902 Japanese companies established in 1902 Fuyo Group Financial services companies based in Tokyo

History

See also

References