Company history

Daiwa did not begin as a brokerage. Its source is Fujimoto Shoten, one of Osaka’s largest rice wholesalers, which moved into finance as the Meiji economy took shape; the family opened a bank in 1895, and in May 1902 Fujimoto Seibei founded Fujimoto Bill Broker in Osaka on a simple observation — Japanese banks had no domestic market in which to raise short-term funds. Dealing in call money and bills rather than shares, the firm effectively opened Japan’s call money market. Branches followed in Kobe, Kyoto, Nagoya and Tokyo within a year.

Securities came in through the same door. When the Russo-Japanese War broke out in 1904, Seibei bought government treasury bonds and exported them to London, handling some ¥170 million — the firm’s first substantial securities business and, at the same time, Japan’s first international securities transaction. Incorporated in 1906, it was renamed Fujimoto Bill Broker Bank in 1907 when the government ruled that bill broking fell under the Banking Ordinance, and wrote securities dealing into its charter alongside call money and banking. The 1909 collapse of Dai-Nippon Sugar, its largest client, nearly took the firm with it; Seibei stepped down and Hiraga Bin rebuilt it, pushing from 1911 into underwriting public and corporate bonds and, from 1917, into re-importing Japan’s foreign-currency bonds through offices in New York, London and Amsterdam.

The 1927 revision of the Banking Act forced the choice that made the company what it is: bill broking had to be separated from banking, and Fujimoto had to be either a bank or a securities firm. It gave up the bank. In 1933 it dropped banking and became Fujimoto Bill Broker Securities — though it kept brokering call money, its founding trade, until the Securities and Exchange Act ended it in 1948. Four years after the switch it invented Japan’s first unit trust, studying a structure with no domestic precedent and launching the Fujimoto Securities Investment Association in July 1937. Wartime consolidation did the rest: renamed Fujimoto Securities in 1942, it merged as an equal with Nippon Trust Bank in December 1943 to form Daiwa Securities, with capital of ¥18.75 million and a head office moved from Osaka to Tokyo.

Postwar reconstruction started with the balance sheet — capital written down to ¥9.6 million in July 1948, then raised repeatedly through the 1950s — and with the loss of the founding business, as the 1948 Securities and Exchange Act ended short-term money dealing and the bill-broking operation was sold off in 1949. What replaced it was product invention. A privately placed issue in August 1948 was Japan’s first convertible bond; in June 1952 Daiwa designed and launched Japan’s first open-end investment trust, fixing the drawbacks of the semi-closed form then in use; and in June 1954 it started “Tsumitate Open,” the first accumulation plan in Japan built on dollar-cost averaging. By mid-1955 it was managing more than ¥30 billion across the two trust formats, with 1,900 staff and fifty-five offices.

The pattern hardened into a strategy. As a clear number two to Nomura, Daiwa could not win a branch-by-branch retail war, but it could import financial structures faster than anyone else and translate them for Japanese investors — fewer people, more differentiation. A New York representative office opened in 1959, London in 1964, subsidiaries in Hong Kong in 1970 and Singapore in 1972; the firm was licensed as an integrated securities company in 1968 and moved to the First Section of the Tokyo, Osaka and Nagoya exchanges in 1970.

The lead in international product was real, not rhetorical. Daiwa was lead manager of the first Asian dollar bond in 1971, sold the Dreyfus Fund in 1973 as the first foreign investment trust distributed in Japan, and underwrote the first Euroyen bond in 1977. From the Asian dollar market’s birth to October 1981 Daiwa led 37 issues against Nomura’s seven and Yamaichi’s four; in Euroyen bonds over the same period it managed eight against Nomura’s four. At home it earned a different reputation: it cut costs ahead of rivals through the securities slump to 1965, becoming known as “the solidly run Daiwa,” put in online systems early, and in 1975 set up the computing subsidiary that would become the Daiwa Institute of Research.

A leadership fight surfaced in autumn 1980 and put Doi Sadakane in the president’s chair. He spent his first year visiting all 94 domestic branches, and replaced churn with a rule that read oddly for a broker: if the customer wants bonds, sell bonds, not the equities on which the firm earns more. Morale and recruiting recovered, and the year to September 1981 produced record recurring profit. But the underlying position was third, not second: equity brokerage commissions of ¥83.1 billion against Nikko’s ¥90.5 billion, ¥12.94 million per employee against Nomura’s ¥16.57 million, net assets some ¥70 billion behind Nikko. The weakness was domestic retail — in the forty regions where the big four competed, Daiwa ranked fourth in eighteen branches in fiscal 1980. It was also the only one of the four without its own research institute, which it fixed in 1982.

The answer to a thin domestic base was a bank. In November 1984 Daiwa and Sumitomo Bank unveiled a multi-pronged tie-up — lending against securities Daiwa held in custody, a shared card — and Doi made the direction plain: “We have blood ties with Sumitomo. We took the long way round through the credit associations, the mutual banks and the postal savings system because Sumitomo was the strongest counterparty of all.” Combining banking and trust functions with securities went faster abroad than at home: Daiwa Europe in 1981, a US trust company in 1986, a UK banking subsidiary in 1987, and in the same year the self-designed “Daimyo bond” for the World Bank, splicing the best of the Samurai and Eurobond forms.

Seven consecutive years of ¥100-billion-class recurring profit ended with the bubble. Net losses ran ¥42.5 billion for the year to March 1992, ¥44.5 billion to March 1995, ¥80 billion to March 1997 and ¥83.7 billion to March 1998 — even as Daiwa became the first in the industry to offer internet share trading in April 1996. Then in October 1997 payments to sokaiya racketeers came to light, and Hara Yoshinari, nineteenth in the executive ranking, was made president overnight. When Yamaichi Securities shut down the following month, rumours that Daiwa too was hiding off-balance-sheet losses cut its share price from ¥728 to ¥390. Hara assumed from the start that the answer was a holding company, and began splitting wholesale from retail. He dined with Sumitomo Bank’s Nishikawa Yoshifumi in December 1997; the alliance was announced on 28 July 1998, the last of the big three to move.

In April 1999 Daiwa Securities transferred its wholesale business to a joint venture with Sumitomo Bank — Daiwa Securities SB Capital Markets, owned 60/40 — and its retail business to a newly incorporated Daiwa Securities, keeping only the shares. The parent became Daiwa Securities Group Inc., the first pure holding company among listed Japanese companies and the first in the securities industry. The reorganisation was carried through the staff as well: everyone formally resigned and was rehired, nine job grades were compressed to four, and in the wholesale company two people on the same grade could differ five-fold in bonus. A consolidated net loss of ¥127.9 billion in the year to March 1999 became a ¥105.4 billion profit the next year as the IT market ran. In 2001 the venture absorbed Sakura Securities’ business and was renamed Daiwa Securities SMBC.

The structure that made the alliance possible also made its unwinding possible. When Sumitomo Mitsui bought Nikko Cordial in 2009 and pressed for control of the venture, the two sides deadlocked, agreed to separate on 10 September, and on 31 December Daiwa bought out the 40% stake for an initial $1.9B (¥174bn). Suzuki Shigeharu chose to restart as an independent full-line house — and to build the missing bank himself. Daiwa Next Bank was incorporated in April 2010 with capital of $1.9B (¥165bn) and opened the following year, offering deposits only as an investment product and sweeping idle cash out of securities accounts and into the group. At the same time Daiwa pushed hard into Asia, designating Hong Kong a second headquarters, injecting some ¥100 billion into overseas units, and paying about $1 billion in 2010 for KBC’s global convertible-bond and Asian derivatives businesses.

The expansion met a falling market. Net losses of ¥37.3 billion and ¥39.4 billion followed in the years to March 2011 and 2012, driven by Global Markets; in November 2011 Moody’s cut the rating to Baa3, one notch above junk. Daiwa shrank fast — cost cuts raised from ¥40 billion to ¥60 billion a year, 500 overseas jobs gone, exits from European equity underwriting, derivatives and prime brokerage — and in April 2012 folded the wholesale company back into Daiwa Securities, reunified after thirteen years. Recovery came quickly, with ¥169.4 billion of net profit in the year to March 2014. Nakata Seiji then went the opposite way from rivals after 2017, opening branches while others closed them, and in April 2024 Ogino Akihiko used that retained face-to-face network to declare the real change: away from the single-product trading model the firm had run on since its founding, toward wealth management measured by the growth of clients’ assets. Capital alliances with Aozora Bank and Japan Post Insurance followed the same year, and Daiwa Next Bank’s deposits passed ¥5 trillion in January 2026.