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European financial institutions need to strengthen their position in the Japanese market if they are to compete with their U.S. counterparts on a global scale, said the head of Societe Generale’s operations in Japan.
Since last month, the France-based Societe Generale Group has been running its international finance business under the new logo of SG.
Christian Gomez, chief executive officer for SG Japan, predicted in a recent interview that for any financial firm to be globally competitive in the future, it will need to be strong in the three major markets — the United States, Europe and Japan.
SG’s strengths in Europe will be a great advantage in luring potential Japanese investors, especially after the January 1999 introduction of the euro, the single currency unit created by the European Union, Gomez said. “(For European institutions,) it is very difficult to penetrate the U.S. market, and to be global, the strengthening of the Japan position is absolutely necessary,” he said, adding that he believes in the future there will be “very few” financial companies that can be called global.
Gomez said that while one of the strengths of U.S. financial firms — which have been in Japan longer than many European firms — is the scale and depth of the American market itself, the euro’s launch could lift the standing of Europeans in Japan.
He added that his firm is determined to make full use of the euro’s launch to boost business in Japan, noting that the “Big Bang” financial reforms are opening doors to a vast range of opportunities in the Tokyo market.
The new currency will deepen the financial markets of Europe, where Societe Generale has a solid standing, and some of the biggest Japanese institutional investors are already showing great interest in euro-related products, Gomez said.
“While Japan is the world’s second-biggest economy, financially it is still an emerging market — a lot of the products traded here are lagging far behind those traded in other markets,” he said.
He expressed confidence in Societe Generale’s ability to provide financial products that are tailor-made for clients, and said he expects areas such as the securitization business to become huge in Japan.
Societe Generale has moved to broaden its business base in Japan by building up internal staff and business lines. It also acquired Yamaichi Asset Management Co., an affiliate of the now-defunct Yamaichi Securities Co., to establish SG Yamaichi Asset Management Co. “There are three ways for a financial institution to grow in a market — internal growth, acquisition and alliance — and so far SG has used the first two ways,” Gomez said.
Some U.S. firms, meanwhile, have started securing footholds in the Japanese market through strategic alliances with Japanese partners.
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