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HSBC to boost private banking by 20 pct

HSBC Holdings Plc, which entered the private banking business in Japan 11 years ago, touts a ‘tailor-made’ approach, where clients with assets of 300 million yen ($2.6 million) or more are paired up with a private banker.

‘We’d like to see growth of 20 percent or more,’ Fumio Matsushima, head of private banking at HSBC in Japan, told the Reuters Wealth Summit on Wednesday.

‘Growth of our customer base will be, of course, the first thing,’ he said. ‘How much our assets under management will increase from that is another factor.’

To cast a wider net, HSBC would like to open at least two more private banking offices—one in Osaka and one in Nagoya—to supplement its current business in Tokyo, Matsushima said.

While the London-based bank has been doing business in Japan for about 140 years, it has largely been a niche player.

Recruitment remains a challenge for its private banking business, said Matsushima, who joined the bank in 2005 after more than 20 years with Citigroup Inc in Japan and the United States.

‘As a business, private banking doesn’t have a long history in Japan,’ he said. ‘One challenge we face is being able to gather top-notch bankers.’

Matsushima declined to give the number of private banking staff in Japan but said the number had doubled over the past two years.

While potential clients are prosperous, they are relatively few in number. Only 865,000 households in Japan had assets of 100 million yen or more, according to a 2006 report from Nomura Research Institute Ltd.

Financial assets held by this group totalled about 213 trillion yen as of 2006, according to the latest data available from Nomura Research.

Matsushima declined to give specific figures about the size of HSBC’s private bank in Japan. Worldwide, its private banking business had $408 billion in assets under management and a staff of 6,500 by the end of 2006.

Worldwide assets at least doubled in the previous five years, with Japan largely mirroring that trend, he said.

Retail business

To reach a broader spectrum of the wealthy, HSBC plans to roll out a separate retail banking business in Japan starting in January.

The bank will target the millions of ‘mass affluent’ Japanese, those with at least 10 million yen in liquid financial assets, but less than the 300 million required for private banking.

HSBC reckons 6.3 million people in the Tokyo and Osaka areas alone will be eligible for its mass affluent services. The bank could open as many as 35 of its ‘HSBC Premier’ branches in Japan, HSBC Chairman Stephen Green said at a Tokyo news conference last month.

Matsushima said there could be some eventual cooperation between the private bank and the HSBC Premier business in Japan.

‘HSBC Premier is already in business in other countries, so there has been some synergy between it and and private bank.’

‘I expect there will be a similar synergy here in Japan as well.’