by Noriyuki Morimoto
As a response to new policies set by the Financial Services Agency (FSA), Nomura Securities disclosed its new management principles. In it, the company announced that it would no longer give special treatment to Nomura Asset Management under the same holding company. It also stated that the selection process of investment trust products would be improved to utilize research and analysis results of rating agencies, and high-quality products would be selected from a wide range of options.
It is not just Nomura, but all financial groups in Japan that prioritize relationships within the same corporate group, allowing for conflict of interest. Needless to wait for the FSA’s comments, that has been a common understanding in the financial industry. Nomura’s decision to change this situation would likely hold significant meaning in the history of finance in Japan.
Between Nomura Securities and Nomura Asset Management, the risk of conflict of interest exists not only around investment trusts, but in all types of asset management businesses. The idea of Nomura’s management principles should not be limited to sales of investment trusts. When attempting to remove all risks of conflict of interest, the relationship between the two companies would be severed in every way, including shared management philosophy, exchange of personnel, cooperation in sales activities, and exchange of information.
Since Nomura Securities has a strong client base, expanding its reach of product procurement would only have positive impact. However, Nomura Asset Management has now become one of many management companies for Nomura Securities. Without Nomura Securities’ support, is it able to survive as a truly independent investment management business, purely by its own management skills?
Of course, it is not a question of whether Nomura Asset Management can survive. There is no other choice for it other than to part ways with Nomura Securities and establish itself as a completely new company, and improve true skills of asset management. Ultimately, it should become independent enough that its trade name Nomura would get in the way, urging the company to be determined to get rid of it.
So, would Nomura Asset Management be able to let go of its Nomura trade name? If it can, would that happen in the near future?
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.