Barclays Wealth has made its first
break into the Japanese wealth management market following the
completion of a joint venture (JV) deal with Sumitomo Mitsui
Banking Corporation (SMBC) and SMBC-owned securities company Nikko
Cordial Securities.

A Barclays Wealth spokesman said
the joint venture would leverage its investment expertise,
knowledge of behavioural finance and range of products to assist
SMBC tap into its Japanese client base.

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Barclays Capital, the bank’s
investment arm which already has a presence in Japan, will be used
to source investment products.

 

Japan’s
potential

Private banks are rushing to set up
JVs and extend their offices throughout Asia-Pacific, with Japan
providing lucrative wealth management potential.

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Boston Consulting Group (BCG)
estimated assets under management in Japan have almost returned to
pre-crisis levels, totalling $14.9trn in 2009.

BCG noted the country had
1.2mmaires, the second-largest population behind the US, holding
about $3.1trn in assets. The 2010 Merrill Lynch/Capgemini World
Wealth Report estimated there were as many as 1.65m Japanese
high net worth individuals (HNWIs).

Operating as SMBC Barclays Wealth
Division, the new unit will run within Nikko and be staffed by
employees from Barclays, SMBC and Nikko.

 

Osaka, Tokyo and
Yokohama

Initially the JV will focus on
providing private banking services for HNWIs in Osaka, Tokyo and
Yokohama.

“In SMBC, we are delighted to have
a partner with the local distribution network which gives the JV
unparalleled access to the Japanese high net worth client base,”
said Barclays Wealth Asia-Pacific chief executive Didier von
Daeniken.

Yukihide Sakai, seconded from
Barclays, will co-head the JV with Hisatsugu Yoshida from SMBC and
Kiyokazu Watanabe from Nikko.

The new joint service company has
split ownership, with SMBC holding a 50.1% stake and Barclays
holding 49.9%, although no cash is being paid and no assets
transferred between the partners. Barclays Wealth already has
offices in Hong Kong, Singapore and India.

 

SMBC buys up Kotak
stake

Meanwhile, SMBC has completed a
separate deal to acquire 16.4m shares in Indian bank Kotak
Mahindra, which amounts to approximately 4.5% stake on a post-issue
basis.

Estimated to be worth almost $300m,
the transaction is thought to be the first equity investment by a
Japanese bank into India.

Although the investment is in Kotak
Mahindra group, the added investment will allow Kotak Wealth
Management to tap into Japan’s mature wealth market.

Kotak’s wealth management arm
claims to provide financial advice and manage wealth for 30% of
India’s top 300 families and serve 3000 private clients. It would
not disclose assets under management figures but has offices in 13
cities across India.

Kotak and SMBC have also entered into a memorandum of
understanding to explore opportunities arising from cross border
business, investments and trade flows, with a substantial focus on
the India-Japan corridor. The deal is subject to regulatory
approval.