20 years on: Some Yamaichi alumni prove themselves in deregulation

November 26, 2017

Tokyo- In one of the most memorable scenes from Japan's financial crisis that erupted in 1997, then Yamaichi Securities Co. President Shohei Nozawa made a tearful public apology for the company's bankruptcy and begged for sympathy and help for nonexecutive employees.

"It's our (management's) fault, not employees'," Nozawa howled at a televised news conference, then stood up and bowed deeply, still crying. He was meeting the press on Nov. 24, 1997, soon after the debt-laden stockbroker applied to shut down voluntarily.

In the subsequent 20 years, some of the former Yamaichi employees Nozawa defended have made good use of their experiences with the century-old company and proved themselves competent players in a financial industry that was going through deregulation.

A Yamaichi alumnus, Yukihiro Yabuki capitalized on his knowledge and skills primarily in financial engineering during the rapid rise of online stockbrokers around the same time as the collapse of Yamaichi.

After seeing the demise of Yamaichi at the age of 33 and working for Sakura Securities Co., Yabuki switched to major online stockbroker Matsui Securities Co. He gained a seat on Matsui's board when he was 40 and, currently age 53, he serves as adviser to the company.

A graduate of the University of Tokyo's Faculty of Medicine, Yabuki entered Yamaichi when the company was eagerly recruiting students with science and engineering majors and an accurate handle on complicated financial engineering. He was drawn to Yamaichi by the enthusiastic pitch of a former older student at the school and by the prospect of handsome bonuses, which would account for half of annual income.

But in the securities industry at the time, sales representatives, the main moneymakers, were placed higher at companies than the science and engineering staff, who were kept to background roles.

After Yamaichi went bankrupt, deregulation sparked the growth of online stockbrokers, driving up demand for science personnel with specialist expertise.

"If I'd stayed with Yamaichi, I wouldn't have been promoted to board member at the age of 40," Yabuki said. "I think former top sales representatives (at Yamaichi) probably had a hard time after changing jobs."

In his time at Yamaichi, Yujiro Baba was moved to a lesser role after misconduct by a subordinate and arguments with a superior. But the expertise on investment trusts and pensions he acquired after the effective demotion helped him set a new course after the company's failure. Jiji Press