Russian Business Expansion
One distinctive feature of Michinoku is its expansion into the Russian financial market. This has been said to be one legacy from former president Kosaburo Daidōji. Daidōji was said to have developed an interest in Russia after hearing from his father, who had studied in Europe, say that Russians were different from other Europeans in that they did not discriminate against Japanese.
Daidōji had eyed the Russian market since the collapse of the Soviet Union, and finally established the subsidiary on July 7, 1999, becoming the first subsidiary of a Japanese bank to open in Russia. Following this, Michinoku opened a branch in Yuzhno-Sakhalinsk on August 12, 2002, and then a branch in Khabarovsk on July 7, 2003. Presently, the Russian operations are said to have a scale of around 10 billion yen and around 7,300 personal accounts, including an account held by Russian pop group t.A.T.u.
There is some controversy behind this move, however. When Daidōji first initiated the Russian operations, he said that he did not expect to turn profits for 5–10 years. Industry experts and former employees have criticized this move, claiming that “while the reason for the expansion was that the market in the prefecture was saturated, it was a really risky move,” and “the expansion of business into Russia has come at the expense of the development of the firm.” While the Russian subsidiary claimed a 240 million yen in pretax profits in December 2004, Michinoku injected 2.1 billion yen of capital into the subsidiary in August of that year. One former employee said that Michinoku was using capital injections to eliminate the losses by the subsidiary.
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