Japanese bank Nomura aims to replicate its wealth management model – which taps its network of corporate clients – across the region, with a major focus on Southeast Asia and small business owners.
This follows last month’s move to integrate the group’s Japan and Asia ex-Japan wealth businesses into one unit with ¥15.3 trillion ($151 billion) in assets under management, headed by Juntaro Kimura. An estimated 90% of Nomura’s Asian private wealth assets are managed for domestic Japanese clients, but the bank aims to grow the ex-Japan portion.
The wealth division put its first dedicated team in Seoul this month, with a view to expanding its base of South Korean clients. Kimura declined to provide names or numbers of staff or details of whether they comprise hires or transfers.
Its strategy in the country is different from that in other Asian markets, due to the particularly close relationships between Japan and South Korea, said Kimura. The focus is on Korean company owners who have strong businesses and relationships in Japan – the likes of IT and gaming firms that might wish to do IPOs in Tokyo.
Meanwhile, the bank plans to increase wealth management headcount across the region with a focus on small business owners. It is targeting an increase in RMs to 300 from 200 today and in AUM to ¥20 trillion, Kimura said, declining to give a likely time frame.
Nomura is the dominant player in Japan’s equity syndicate market, he pointed out, with a 50% market share of listed company relationships as lead arranger for public offerings, and it has relationships with 70% of listed companies generally in equity syndicate.
These relationships benefit the wealth unit, which has many company owners as clients, in a model similar to that employed by Goldman Sachs and UBS, noted Kimura. “We believe we can take that successful business model and roll it out for small and medium-sized enterprises [SMEs] in Asia,” he said.
However, the bank’s corporate network in the region outside Japan is “limited” at present, noted Kimura. The focus is on bigger companies, as it doesn’t have sufficient resources to cover SMEs outside its home market, he added. Hence the plan to strengthen its wealth management capabilities in Asia ex-Japan.
The bank already has wealth management presences and booking centres in Hong Kong and Singapore, but Kimura expects the most rapid wealth business growth to come from Southeast Asia.
What should also benefit the growth of the private wealth business is that many Japanese companies are looking to expand into other Asian markets, he noted, due to low growth and a shrinking population at home.
In turn, Asian companies and SMEs – such as auto and consumer firms – are looking to come to Japan to build businesses and do joint ventures with Japanese companies. Such clients are also likely to want wealth management expertise, said Kimura.
It is in areas such as this that Nomura can challenge the big wealth managers such as Citi and UBS, due to its dominant Japanese presence, he suggested.
Asked how rising costs and regulatory pressure on private banks post-crisis have affected Nomura and how it’s looking to maintain cost efficiency and profit margins, Kimura was non-commital.
“Ensuring full compliance of regulatory requirements is a top priority at Nomura,” he said. “Our goal is to fully leverage our global network and cross-sell opportunities to maximise profitability.”