S tructural reform in Japan?s financial sector took effect back around 2001, referred to as the Big Bang. Entering the new millennium, most state-owned financial institutions in the nation became privatized and the bulk of bad loans carried over from the post-bubble era were addressed. Consolidation meant the creation of major retail and commercial behemoths such as the Bank of Tokyo-Mitsubishi UFJ, which, based on assets, today ranks as the second largest of its kind in the world. Mizuho Bank, one of the nation?s megabanks, handles the second-largest financial services business in the country.
Thus the landscape for commercial banking in Japan presents unique challenges to major foreign global banks.
Proprietary instruments
ING Bank in Japan provides a one-stop portal for such commercial banking products as general and specialist lending facilities, lease financing, debt execution and maintenance, and correspondent banking services. So what makes Japan such a unique market when it comes to these ?typical? global instruments?
?One of the main challenges ING Bank faces is heavy competition from Japanese banks with much larger domestic franchises and a stronger funding capacity within Japan,? says Yoji Morishita, country manager, ING Bank N.V., Tokyo Branch. ?In such an environment, we are quite selective in what we choose to focus on.?
UBS offers one of the most comprehensive combinations of wealth management, investment banking and asset management products and services to their clients in the Asia-Pacific region.
?We wouldn?t consider these offerings ?typical?,? says Jason Kendy, chief spokesperson, UBS Japan Securities Co., Ltd. ?Each of our solutions tends to be customized toward client needs.?
ING Bank looks for business opportunities in fields for which it has strong expertise and operational excellence in. ?Our core strength lies in structured finance, real estate finance and corporate lending products,? explains Morishita.
Japanese clients ? whether wealthy individuals, corporations, or institutional investors ? demand financial strategies that are not simply global, but additionally address their individual local market circumstances, according to UBS Japan Securities.
?We approach our business here by understanding local market requirements and realities first,? says Kendy. ?We then build on that knowledge to bring our customers solutions that meet their domestic and international goals.?
What clients value is that ING Bank can, and very often does, work side by side with its teams across the world, as well as internal groups, to give the very best structured solution to its clients.
?In the same way, we have also created strategic partnerships with some Japanese banks to enhance what we can offer our clients,? adds Morishita.
Industry insights
With approximately 8,000 employees in 13 locations in the Asia-Pacific, UBS puts its clients? needs at the heart of its business. So what has been the biggest improvements in the Japan market since UBS first set up operations here?
?UBS is celebrating its 150th global anniversary this year, and we have been in Japan since the 1960s,? says Kendy. ?The Japanese market has literally transformed in the decades since, so it is almost impossible to pinpoint any one area.?
ING has had a presence in Japan since 1974 and established its branch office in Tokyo back in 1985.
?In the last four decades, our Japanese clients have become truly global in terms of foreign investment,? points out Morishita. ?Japanese companies in the 1970s or so focused on trading, that is, manufacturing products that they then exported overseas. But issues such as escalating labour cost, yen appreciation and price competition soon compelled them to switch strategies from trade to investment.?
For UBS, quite possibly the Japanese market?s greatest achievement is its continued commitment to change itself. ?Not nearly enough people stop to consider how much this market has evolved and improved in a relatively short period of time,? says Kendy.
Japanese companies started to make real investments to enter overseas markets from their existing solid platform in Asia to Europe and America, according to ING Bank.
?We, therefore, shifted focus likewise to meet our clients? needs,? says Morishita. ?We started to provide an array of financial solutions.?
Firstly, ING Bank focused on overseas structures/project finance for Japanese clients investing in emerging markets and developed countries.
?Secondly, we focused on global cash management services as the optimal solution for liquidity management on a global basis,? he adds.
Source: http://eurobiz.jp/2012/08/commercial-banking/
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