For the first time in a generation the Japanese banking industry is back on the front foot, helping in the rescue of Wall Street's halt and lame. Mizuho's decision to join the Asian and Middle Eastern investors pumping capital into Merrill Lynch is a milestone.

You have to go back 21 years, to when Sumitomo Bank was able to buy 10 per cent of Goldman Sachs for a mere $500million, for a deal that showed Japanese banks in such confident and expansionist mood. Only four years ago Goldman was bandaging Sumitomo.

The bursting of the Japanese property bubble in 1989 led to a prolonged era of bad debts, soul-searching, rescue takeovers, capital injections and defensive mergers for Japanese banks and investment banks. Of the big four securities houses, only Nomura survives as an independent entity. Yet those still in business are quietly confident about their prospects in the world, having, by luck or good judgment, largely escaped the two banking catastrophes of 2007 - US sub-prime mortgages and leveraged loans.

Even the few with operations in these areas have done relatively well. Nomura had sub-prime exposure but saved itself billions of dollars by selling out in September, before the really big price collapses. It also saw the writing on the wall in leveraged loans, pulling out entirely just before the credit crunch.

Japan's recovery has been anaemic for years and its banks are not about to take over the world - beside the sovereign wealth funds, their contributions are likely to be modest - but there is potentially more capital-exporting to come, not only in financial services. Corporate Japan is completely unleveraged today. It has enormous firepower to make acquisitions in the West. According to one senior Japanese businessman: “Our powder is dry.”

The low-growth domestic economy provides little comfort for ambitious Japanese companies. So far, only Japan Tobacco and Asahi Glass have made any moves in Britain, swallowing Gallaher and Pilkington, respectively. But the mood music from Tokyo suggests that more deals may be on the cards.

The paralysed capital markets are starting to function again, channelling capital to where it is needed most. The arrival of the Japanese also provides some extra competition to the sov funds, which until now have been able to wrest glittering terms from Wall Street banks with no one else to turn to.

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