Article 102, ¥1.96 trillion, and an outsider as chairman (2003)

What nationalization left behind

The weight of this decision lies in the nerve it took to look outside the bank for a leader at the bottom of the crisis. The state supported a bank not by resolving a failure but through a first-of-its-kind framework of preventive recapitalization, and entrusted the rebuilding to a chairman from a railway company, far removed from the conventions of finance. Questioning, with an outsider’s eye, the ways of working that had been taken for granted inside a bank is what became the driving force of a recovery that went beyond simply filling a hole in capital. There is also a sense in which the hard constraint of nationalization was what opened the room for bold reform.

That said, the retail specialization Resona chose was not a choice blessed by its environment. The long years of negative interest rates turned a sticky deposit base into a drag on earnings instead, and for a long time displayed the weakness of a model that earns only at home. Even so, not having the option others had — of covering the gap overseas — is what kept the wound of the crisis shallow and sustained the repayments to the end. A single line of choices, to abandon the overseas business, concentrate at home and bet on retail, took more than twenty years to turn at last into a strength. How much patience can a management take on before a response to one crisis becomes competitive advantage? Resona’s two decades leave that question with us today.