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Japan's bank eyes venture with Barclays
By Finbarr Flynn |
January 10, 2009, Saturday
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SUMITOMO Mitsui Financial Group Inc may set up a wealth-management unit in Japan with Barclays Plc, aiming to tap the nation's US$15.9 trillion in household assets by harnessing the British lender's expertise and products.
"We're discussing whether we can work together in the area of private banking," Sumitomo Mitsui President Teisuke Kitayama said in a Bloomberg News interview on Thursday at the bank's head office. The companies may create a separate unit, he said.
Japan's third-biggest bank by revenue is forecasting its smallest profit in four years as the nation's recession drives bad-loan costs higher. The Tokyo-based company is looking to Barclays to boost private-banking profit after investing 500 million pounds (US$760 million) in the London-based bank last year.
Barclays' wealth-management business had 133 billion pounds in client assets at the end of June and employed more than 7,700 people in 20 countries, according to its Website. Sumitomo Mitsui set up its private advisory department in April 2007. "Sumitomo Mitsui doesn't have a trust bank, so it's a good idea for them to create a platform if private banking starts to take off," said Nana Otsuki, a Tokyo-based analyst at UBS AG with a "neutral" rating on the stock. "Japanese clients aren't used to paying large fees for advisory services, so it's still a difficult area to make money in."
About 8 percent of the US$15.9 trillion in assets held by Japanese households is invested in shares, the Bank of Japan said last month, compared with about 33 percent for United States households.
Kitayama, 62, said his company may also work with Barclays in US investment banking, following the British lender's acquisition of failed Lehman Brothers Holdings Inc's American operations last year. The two banks aim to sign an agreement on the details of their alliance within four months, he said.
Barclays said yesterday it hired 10 people, including former bankers at Nomura Holdings Inc and Lehman, to expand its investment-banking business in Japan. The firm hired about 100 people, mainly from Lehman, in October to boost its Asian equity research and sales business.
Japan's biggest financial companies are seeking to expand abroad after buying stakes last year in overseas banks and brokerages.
"We're discussing whether we can work together in the area of private banking," Sumitomo Mitsui President Teisuke Kitayama said in a Bloomberg News interview on Thursday at the bank's head office. The companies may create a separate unit, he said.
Japan's third-biggest bank by revenue is forecasting its smallest profit in four years as the nation's recession drives bad-loan costs higher. The Tokyo-based company is looking to Barclays to boost private-banking profit after investing 500 million pounds (US$760 million) in the London-based bank last year.
Barclays' wealth-management business had 133 billion pounds in client assets at the end of June and employed more than 7,700 people in 20 countries, according to its Website. Sumitomo Mitsui set up its private advisory department in April 2007. "Sumitomo Mitsui doesn't have a trust bank, so it's a good idea for them to create a platform if private banking starts to take off," said Nana Otsuki, a Tokyo-based analyst at UBS AG with a "neutral" rating on the stock. "Japanese clients aren't used to paying large fees for advisory services, so it's still a difficult area to make money in."
About 8 percent of the US$15.9 trillion in assets held by Japanese households is invested in shares, the Bank of Japan said last month, compared with about 33 percent for United States households.
Kitayama, 62, said his company may also work with Barclays in US investment banking, following the British lender's acquisition of failed Lehman Brothers Holdings Inc's American operations last year. The two banks aim to sign an agreement on the details of their alliance within four months, he said.
Barclays said yesterday it hired 10 people, including former bankers at Nomura Holdings Inc and Lehman, to expand its investment-banking business in Japan. The firm hired about 100 people, mainly from Lehman, in October to boost its Asian equity research and sales business.
Japan's biggest financial companies are seeking to expand abroad after buying stakes last year in overseas banks and brokerages.
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