Enter one of Tokyo Star Bank’s four new branches, and you are soon ushered into booths arranged for private consultations with customers.

Stay long enough, and you’ll see a few first-time depositors start at being greeted, hide their panic behind nervous giggles as they’re led to a booth, then quickly head for the door.

Todd Budge, newly appointed president of the second-tier regional bank, is banking this will change. Maybe not this year, but soon. He figures the Japanese consumer is ready to try out more investment trust funds and foreign-currency deposits.

“We think that consumers in Japan are under-served by banks,” he said. “People don’t need banks to make transactions when they can use the Internet, cell phones, convenience stores and the post office.

“We think what Japanese people really need right now is advice and help. A lot of people don’t know what to do with their money.”

If Budge is right, it will be one indication of a breakthrough in a market that, as U.S. securities company Merrill Lynch has discovered, is notoriously hard to crack. The brokerage powerhouse opened 33 retail branches in 1998, only to close a majority of them four years later because the Japanese couldn’t fathom discussing their personal finances with a stranger.

At 43, Budge is Japan’s youngest and only non-Japanese bank president. He speaks fluent Japanese after spending a cumulative 13 years here. Budge first came to Japan in 1979 on a Mormon mission to Kyushu.

He shares with many Tokyoites the despair of finding affordable housing, enduring an hourlong commute and beginning life here with a bare “2LDK” (two bedrooms; living, dining, kitchen combined) apartment with his wife and two children.

That experience is behind Budge’s belief that the time is ripe for a bank like Tokyo Star, which operates 62 branches mainly in Tokyo.

“I still think (Japan has) got a relatively low standard of living, considering the economic success Japan’s had,” he said. “That’s going to change, as people take more control of their finances.”

Tokyo Star saw a phenomenal year-on-year rise of 28 percent in deposits in fiscal 2002 as it regained depositor trust following U.S. investment fund Lone Star Fund’s 2001 purchase of failed predecessor Tokyo Sowa Bank.

But the regional bank won’t see deposit growth this fiscal year, Budge said.

It will focus instead on maintaining its financial strength and a return on equity of 20 percent, in part by increasing innovative loan products to smaller companies, he said.

Profitability won’t come through so-called relationship banking — promoted by the Financial Services Agency as a model for regional banks — but through simple business sense, he said.

“The nuance of relationship banking is you lend whether it makes good business sense or not, but because you have a relationship,” Budge said. “We only do business deals that make sense for the customer and for the bank. . . . A bank is not a welfare department of the government.”

Budge laughed when asked if such lending practices make Tokyo Star a U.S. bank.

“We’re not trying to become a U.S. bank, we’re not trying to become Citibank or a big global bank, but we’re also not a Japanese bank,” he said. “We take the best practices worldwide and apply them to a local regional economy in a way that works. That’s all.”

Budge was recruited by Tokyo Star in 2002, when he was an executive operating officer of U.S. conglomerate General Electric Capital’s consumer finance arm in Japan. The attraction of Tokyo Star was its simple relationship with its owner, Lone Star, and the sense that individual employees’ decisions would have more weight in changing the bank.

When Lone Star Fund bought the bank in 2001, Tokyo Sowa had no personal computers and its employees still used abacuses.

Since becoming president in late June, Budge has been waging war on paperwork, work hours and bureaucracy, and delegating more authority to executive officers.

“Don’t hang out until the boss goes home — go home! On the weekends, go home! Vacations — take your vacations!” Budge tells employees. “You’re rewarded based on the results you generate, not the number of hours you put in.”

The bank’s success hinges on employees’ ability to innovate in a crowded market. That doesn’t come from burned out people who work seven days a week, 15 hours a day, he said.

A passion for striking a balance between work and home is one reason Budge stands out in a nation where it is common to see workers volunteer for unpaid overtime.

This balance is as grave an issue to the economy as the problems in the financial system, and is too often ignored, he said.

Does Budge see the Tokyo Metropolitan Government as a rival, particularly with Gov. Shintaro Ishihara threatening to create a new regional bank in the area?

“In general, I think Tokyo Star is in a better position than the government to provide banking services to the public,” he said.

Budge said he has not seen what the metropolitan government’s niche might be, but suggested it should provide more tax incentives for companies and “do what governments should be doing, as opposed to trying to get into the direct-lending business.”

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