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Banks are become more aggressive in their competition for rich customers, setting up specialized services for them.

However, most of the financial groups are providing the financial counseling through newly created subsidiaries rather than their main banks, mindful of the punitive actions financial authorities took against Citibank Japan last year.

Shinsei Financial Center is one such outlet, recently opened by Shinsei Bank in the glitzy Ginza district in Tokyo.

Clients looking for advice on asset management are ushered into a nicely furnished spacious room, including a wine cellar, where they are met by a personal financial adviser.

The bank targets people with assets of over 10 million yen, including successful IT industry entrepreneurs and baby boomers who have come into handsome retirement allowances.

“Japanese banks have long operated under the principle of equal treatment of depositors,” said Satoru Katayama, a Shinsei Bank managing executive officer. But now, “it has become necessary to map out marketing strategies according to customer needs.”

In July, Britain-based Standard Chartered Bank opened an stylishly designed branch office in Tokyo’s Marunouchi business district, targeting rich customers with assets of 20 million yen or more.

The office has a hidden room behind a mirrored wall for Standard Chartered’s elite customers — a completely different environment from the typical bank with its generic benches where customers must wait to speak with a teller behind a counter.

The banks go even further for their “super-rich” customers who have assets of more than 100 million yen, striving to provide “special services,” including advice on investments in real estate and art as well as counseling on insurance, inheritance and tax affairs.

STB Wealth Partners Co., a subsidiary of Sumitomo Trust Banking Co. established in June, goes so far as to provide “advice to customers wishing to send their children to prestigious boarding schools abroad,” President Yoshikazu Tanaka said, referring to customers with financial assets of more than 1 billion yen.

Mizuho Financial Group Inc. intends to establish a subsidiary that it is calling “Japan’s first full-scale private banking company” in October.

The subsidiary plans to give advice on investment trusts and insurance as well as to tie up with companies marketing art and imported automobiles.

But despite the fervor with which these banks are pursuing this niche market, their are potential problems with legal barriers.

Article 12 of the Banking Law states that “banks may not engage in other businesses other than doing the business provided for in the law.”

The banks are mindful of the Financial Services Agency’s sanctions last September against Citibank Japan, the forerunner of private banking in Japan.

The financial watchdog ordered Citibank Japan to close its private banking operations for a number of illegal activities — including money laundering — but also for its involvement in artwork transactions, which are in violation of the law.

To avoid problems with the FSA, the major banks are entering the market with establishing subsidiaries.

They are treading carefully, however, as it is still unclear if these new units will be considered violating banking laws and regulations.

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