SMBC Nikko Securities

SMBC Nikko Securities has its roots in two business entities: Kawashimaya Shoten and the former Nikko Securities. Kawashimaya Shoten (individual business) was founded in July 1918 by Genichi Toyama in Nihonbashi, Tokyo. As the stock brokerage business grew steadily, it was incorporated into a stock company Kawashimaya Shoten Co., Ltd. in April 1920. In August 1928, Kawashimaya Shoten set up Kyodo Securities Co., Ltd. jointly with three other companies, driven by the booming bond underwriting market. However, Kawashimaya Shoten withdrew from the joint business in December 1936. Following the introduction of the Securities Underwriting Services Law in 1938, Kawashimaya Shoten spun off its securities underwriting operations to form Kawashimaya Securities Co., Ltd. in February 1939. After the Pacific War broke out in December 1941, Kawashimaya Securities absorbed Kawashimaya Shoten, its originating organization, in September 1943, amid restructuring initiatives being promoted in the securities industry in accordance with wartime financial control.

The former Nikko Securities Co., Ltd. was originally set up in June 1920 by the Industrial Bank of Japan to launch an independent function for bond underwriting and sales services. The company posted a steady growth in performance, aided by the booming bonds and debentures market and stable capital supply from the parent bank. In November 1943, as financial controls were tightening during the war, the former Nikko Securities absorbed Kyodo Securities.

In April 1944, Kawashimaya Securities and the former Nikko Securities carried out a consolidation-type merger, with the resultant company continuing to use Nikko Securities as its trade name. Kawashimaya Securities was a stock-trading specialist pursuing proprietary development, while the former Nikko Securities was a leading bond trader boasting robust business networks. Through this merger, they aimed to achieve synergistic effects by combining their strengths as well as streamlining management, seeking to meet the needs of the times.

The new establishment was confronted with an array of major challenges. One was related to the stagnant securities market in the 1960s, when the company was forced to take severe actions to weather the situation, such as making changes in its upper management. A severer hardship came from the collapse of the bubble economy in which the Japanese economy had grown for years and peaked in the 1980s. The phenomenal event had a seismic impact on the securities industry, one of the symbolic events of which was a voluntary closure of Yamaichi Securities, in November 1997. Nikko Securities was also thrown into difficulties, during which the company decided to create a partnership with U.S.-based Citigroup. The partnership resulted in an investment banking joint venture, Nikko Salomon Smith Barney Limited, being established in February 1999 (and renamed Nikko Citigroup Limited in April 2003). In October 2001, Nikko Securities was restructured into a holding company and Nikko Cordial Securities Inc., a new organization which took over retail securities service operations.

Nikko Cordial Securities began to win widespread recognition in Japan when the Japanese market suffered a crushing blow delivered from overseas because of the bankruptcy of Lehman Brothers in September 2008. In January 2009, Citigroup, subject to a bailout with injection of public funds related to the financial crisis, announced large-scale business restructuring plans that included the sell-off of retail securities and asset management businesses, including Nikko Cordial Securities. Following this, in May 2009, Sumitomo Mitsui Financial Group (SMFG) and Citigroup announced that an agreement had been reached to allow Sumitomo Mitsui Banking Corporation (SMBC) to acquire Nikko Cordial Securities and other businesses from Citigroup.

In October 2009, Nikko Cordial Securities became a wholly owned subsidiary of SMBC, and in April 2011, changed its name to SMBC Nikko Securities Inc. There were several reasons for the new name to contain “Nikko”. The name represents the value of the brand, which was previously one of Japan’s four largest securities firms, and helps increase the motivation of officers and employees of the former organization. Also, the name is expected to help raise national and international recognition of Nikko Cordial Securities as being a member of SMBC Group, thereby promoting its commitment to the integration of banking and the securities business as well as boosting a sense of unity within the Group.

SMFG and Daiwa Securities Group, on the other hand, announced in September 2009 the agreement on the dissolution of their joint venture as of December 31, 2009, which was an outcome of failed efforts to reconcile differences in basic concepts concerning the management policies of the venture. SMBC Nikko Securities began to gradually accept personnel who had formerly been seconded or transferred from SMBC to Daiwa Securities SMBC.

In October 2016, SMBC Nikko Securities was reorganized from a subsidiary of SMBC to a wholly owned subsidiary of SMFG. In January 2018, the company merged with SMBC Friend Securities, becoming a leading Japanese securities firm with respect to quality and quantity. In July 2018, the company celebrated the centennial anniversary of its founding.