16th in an occasional series on financial deregulation
The Japanese unit of Paribas, a Europe-based multinational investment bank, will concentrate on euro-denominated services and products to survive intensifying competition, according to the firm’s country manager.
“It is crucial to make a positive differentiation in an area where we have strength,” Yusuke Yasuda said in an interview.
Investment trust funds, for instance, are certainly important tools to manage personal financial assets. But every financial firm thinks the same way, Yasuda said, adding that euro-based funds could give his firm a competitive edge. “We are the leading firm dealing with the euro,” Yasuda said. So far this year, Paribas has underwritten about 30 percent of newly issued euro-denominated bonds around the world, he said.
The euro will be launched on Jan. 1, 1999, as the shared single currency of 11 European Union countries. The new European currency is expected to become as influential as the dollar.
Paribas, which also offers dollar-based funds, has a wide range of euro-based services that include bond underwriting and trading and stocks. The Japanese unit hopes to launch its own investment trust funds, advise customers on domestic funds, and introduce foreign funds — all by the end of this year, he said.
The strategy is timed to coincide with the launch of the euro and Japanese deregulation that permits banks to begin direct sales of investment trust funds in December.
The nation’s financial markets are becoming increasingly attractive as business opportunities involving personal financial assets expand, Yasuda said. Japan’s personal financial assets are estimated to total 1.2 quadrillion yen, held in deposits, pension and life insurance, stocks and bonds, and investment trust funds. Investment trust funds — similar to mutual funds in the United States — are managed professionally in stocks, bonds or a combination of both.
Paribas’ Japanese operations, conducted by 350 employees, include brokerage, banking and investment advice. Yasuda expressed interest in forging a business alliance with Japanese financial institutions, although he did not name any potential partners. But he also said that there is no point creating an alliance between a wholesaler and a retailer because it creates few synergies.
A wholesale institution, Paribas would thus be willing to consider tying up with another wholesaler or a wholesale section of a Japanese financial institution, he said.
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