With deregulation introducing more competition into Japan's financial services market, Japanese banks are scrambling to gain the necessary expertise to offer new products and services. That search for help is producing business for American companies. For instance, the local office of big accounting firm KPMG PEAT MARWICK LLP is advising TOKAI BANK, LTD. on the mechanics of private banking, including diversified asset management and risk avoidance. The Nagoya-headquartered midsized nationwide commercial bank plans to offer asset management services to individuals with more than $740,700 in financial assets or $370,400 in annual income, signing up 10,000 well-heeled customers through its branches.
With the government now expected to lift the ban on the sale of investment trusts -- Japanese-style mutual funds -- by banks by yearend, help with introducing or developing these products is much in demand. Under an agreement with FIDELITY INVESTMENTS JAPAN LTD., the Tokyo subsidiary of the world's largest mutual fund manager, ASAHI BANK, LTD. will sell Fidelity mutual funds starting in December. The products will be available initially at 20 to 30 Tokyo-area branches of the midranking nationwide commercial bank. The deal includes training salespeople and providing assistance with customer support services. Fidelity Investments Japan also gained the immediate right to sell its products at five Asahi Bank retail locations in the Tokyo metropolitan region.
For its part, investment banker GOLDMAN, SACHS & CO. has a pending agreement to help FUJI BANK, LTD. develop investment trust products for sale at its branches beginning in December and, possibly, at a number of regional banks. The funds, to be managed by FUJI INVESTMENT MANAGEMENT CO., LTD., will invest in international stocks and bonds. .....GOLDMAN, SACHS & CO. also reportedly will develop for YASUDA TRUST & BANKING CO., LTD. a dollar-denominated money market-type fund for individual investors that could go on sale as soon as this fall. The investment bank will manage the fund, with the principal guaranteed in dollars by CHASE MANHATTAN CORP.
A yen-denominated commodity-type fund for individual investors also is in the works via a tie-up between CITIBANK N.A. and SHIZUOKA BANK, LTD., one of the larger regional banks. About 30 U.S. investment management companies selected by Citibank will invest the money in oil, precious metals, agricultural crops and other commodities. Investors will have to put up a minimum of $37,000 for the seven-year fund. Citibank will guarantee the principal if the fund is held until maturity. The partners hope to attract $37 million in investments. The fund will be sold at Shizuoka Bank branches. It also is expected to be available through other banks.
New York City's FINANCIAL SECURITY ASSURANCE CO. has teamed up with TOKIO MARINE & FIRE INSURANCE CO., LTD. to provide guarantees for asset-backed securities issued by Japanese companies with high credit ratings. The country's top nonlife insurer will cover securities offered domestically, while FSA will do the same for Euromarket issues. As part of the arrangement, FSA will provide expertise on financial guarantees, its main business, to Tokio Marine, which will be in charge of handling negotiations with issuers of asset-backed securities.
An exchange rate of ¥135=$1.00 was used in this report.