Company That Volcker Advises Joins Japanese Bank in Venture

From Reuters

James D. Wolfensohn Inc., the investment bank that landed former Federal Reserve Chairman Paul A. Volcker as a consultant when he left the Fed, said Monday that it has joined with another powerful partner, Japan’s Fuji Bank, to advise Japanese and U.S. companies on mergers.

The new firm, Fuji-Wolfensohn International, will be a joint venture launched with initial investment capital of $55 million, $52.5 million of it from Fuji, the world’s second-largest bank with assets of $345 billion.

Volcker said he will take an active role in the new joint venture and plans a trip to Japan in the near future.

In an interview, Volcker said most of the advice dispensed by the firm will be to Japanese firms attempting to expand in the United States.

“I’d like to give more to the Americans, but that may be more of an uphill battle,” the former Fed chairman said.


More Difficult Now

The former Fed chairman, known for his ambiguous responses when queried about Fed policy, was referring to the rising and role of Japanese firms in American business. While a growing number number of U.S. firms have been acquired by Japanese ones, few American firms have bought Japanese ones. “We want to do it both ways,” he said.

Toru Kusukawa, deputy president of Fuji, also in New York for the launch of the new venture, said U.S. takeovers of Japanese firms would be difficult now, given the relatively high value of the Japanese stock market.

“What we have are a lot of Japanese companies wanting to come over here,” but lacking the knowledge to do so, Kusukawa said.

James Wolfensohn, the chairman of Wolfensohn, said he expects consulting to American firms to grow over the next five years, especially in the area of joint ventures. The initial thrust of Fuji-Wolfensohn will be to give advice to Japanese firms, with Fuji Bank able to step in with financing for transactions, which the joint venture recommends.

“A lot of friends and clients of the bank of expressed an interest in this country,” Wolfensohn said, “and we will be going to work with them and setting up the professional staff for it.”

The professional staff will include one adviser who towers over the others, the feisty former Fed chairman whose tough inflation policies intimidated Presidents from both parties.

“We are pleased to have him, not just because he is well known in the United States but because he is such a well known figure internationally, with global recognition,” Kusukawa said.

Busier Than Before

But Volcker pointed to numerous other commitments that take up some of this time, including his job as an economics professor at Princeton and his voluntary role as chairman of the Commission on Public Service, which is studying the problem of retaining quality people for government jobs.

“In a sense, I’m more busy now than I was at the Fed,” Volcker said. “That’s not to say the significance of what I’m doing is as great, just in terms of busy-ness. I’m just as busy.”

Wolfensohn, one of a growing number of investment banking boutiques working in the specialized but highly profitable business of advising blue chip clients on financial strategies, has only about 30 professional staff members, six of whom will be work on the new partnership with Fuji. For Volcker, the intimate firm is a big change from the Fed, with its scores of economists and a vast army of support staff.

“I don’t have the same command over my time that I used to,” Volcker added. “I don’t have the bureaucracy to protect me anymore.”