A proverb well known among Japanese stock market players goes: "A path leading to a flowery mountain sometimes is not well travelled."

This suggests that to be a winner in the markets, one must sometimes take action that runs contrary to others.

This begs the question: Who will rescue those US financial institutions teetering on the brink of failure with huge amounts of bad loans?

While worldwide attention is intensely focused on this question, a succession of Japanese financial services companies have stepped forward to help rescue the struggling US firms.

Mitsubishi UFJ Financial Group Inc., the largest among Japan's banking giants, has decided to invest about 900 billion yen in the second-largest US securities company, Morgan Stanley.

Meanwhile, the nation's biggest brokerage, Nomura Holdings Inc, recently purchased the Asia-Pacific franchise and the European-Middle East operations of the failed Lehman Brothers Holdings Inc.

Another major domestic financial company, Sumitomo Mitsui Financial Group Inc, is ready to invest in Goldman Sachs, the biggest US securities company, if officially requested.

The US securities firms set to receive capital-boosting support from the Japanese financial institutions are all investment banks, which until recently turned huge profits through their securitization businesses by utilizing highly complex financial expertise and coordinating mergers and acquisitions involving large-scale companies.

Japanese major financial institutions have placed top priority on enhancement of investment banking operations.

By strengthening ties with the US investment banks, the Japanese financial firms hope to significantly boost their presence throughout the world. It seems that now is a once-in-a-million opportunity for the Japanese firms.

After the US subprime mortgage problem first emerged in August 2007, sovereign wealth funds (SWFs), or state-owned investment funds, from oil-rich countries in the Middle East, and Asian nations such as Singapore, stepped in to rescue cash-strapped US financial institutions, leaving their Japanese counterparts standing on the sidelines.

In the current phase of the deepening financial unrest, however, these SWFs have failed to take action, while financial institutions in China and South Korea have turned down rescue requests from the US financial firms affected by the fallout from the subprime loan issue.

The way has thus been cleared for Japanese financial institutions to step onto a "path beyond a busy street".

There is no guarantee, however, that the Japanese companies will benefit by extending a helping hand to the faltering US banks.

If business fails to improve for these US firms, or employees leave in droves after their company is purchased by a Japanese firm, concerns would grow with regard to the ability of the Japanese firms to secure profits commensurate with the investments.

Standard & Poors, a US rating company, reportedly is considering downgrading its rating for MUFG, as its investment in Morgan Stanley could potentially have a negative impact on the Japanese financial entity.

Mizuho Financial Group, for its part, has ignored requests from Morgan Stanley for financial help, in light of the high risks involved due to uncertainties over how the subprime mortgage crisis will pan out.

The biggest risk is that the business model for investment banking services may start to crumble.

Until recently, investment banks garnered large profits via the securitization of yields accruing from mortgage-based assets and "leveraged" investment instruments designed to boost the value of asset investments.

Due to the emergence of the US subprime mortgage problem, there is increasing suspicion that the investment banks' 'cutting-edge' transactions might have been no better than mere gambling.

Further, the number of M&A deals recently has been declining sharply, due to worsening economic conditions around the world.

Hirofumi Gomi, a former director general of the Financial Services Agency who headed this country's financial administration in the late 1990s during a monetary crisis, said: "Given the country's falling birthrate, it's only natural for major domestic financial institutions to turn their attention overseas in search of bigger profits."

As for the financial institutions' ongoing injection of funds into the US investment banks, Gomi said, "Now is undoubtedly a golden opportunity" for Japanese financial groups.

However, "Whether they can triumph on the world stage will depend on whether they can develop a new kind of business, a 'third way' for banking services, by taking on board the corporate cultures of investment banks that may be dissimilar to the way domestic institutions operate," Gomi said.

Against the background of Japan's penchant for savings, domestic financial institutions have long been accustomed to a low-risk-low-return approach to business.

They therefore will have to take considerably high risks when embarking on hybrid operations in tandem with investment banking services.

To discover a "flowery mountain" behind a busy street, the financial institutions must scrutinize their own patterns of doing business.

Saito is a deputy economic news editor of The Yomiuri Shimbun.