Sumitomo Mitsui Financial Group and SBI Holdings plan to jointly provide wealth management services for well-to-do customers in Japan,with the aim of overseeing investments worth ?10 trillion ($69 billion) in five years.
The new joint venture will be funded by SMFG and two group firms ¡ª Sumitomo Mitsui Banking and SMBC Nikko Securities ¡ª as well as SBI Holdings and its flagship domestic brokerage, SBI Securities, according to a statement on Monday.
¡°The widespread adoption of mobile financial services is expected to accelerate the growth of the digital affluent segment, creating a significant market opportunity,¡± said Toru Nakashima, SMFG¡¯s chief executive officer, at a news conference. He said the joint venture aims to become profitable in three years, and is aiming for pretax profits of ?10 billion in five years.
The move underscores the potential of the wealth sector in the country. Japanese households that have financial assets of ?50 million ($347,000) are expected to rise to 6.1% of the total by the end of the fiscal year starting April 2035 from 5% in fiscal 2019, according to forecasts by Daiwa Institute of Research. The amount of assets held is also expected to rise by about a third to ?953 trillion by the end of fiscal 2035 compared with the end of fiscal 2024.
Policymakers in Japan are encouraging individual investors to put more of their money in riskier assets such as equities, to lessen their reliance on government spending at a time when a rapidly aging population strains the social security budget. Even so, Japanese households held about 51% of their financial assets in bank accounts at the end of March last year, a reflection of their conservative investment approach and compared with around 12% in the U.S. and 34% in the euro zone, according to data compiled by DIR.
Similar alliance moves have been happening elsewhere in Japan¡¯s securities industry.
Rakuten Securities established a joint venture with Mizuho Securities, with which it has a capital and business alliance, and began operations in April last year. The company is targeting households owning financial assets of ?20 million or more, and is aiming to attract individuals in their 40s and 50s who are Rakuten Securities customers and have face-to-face financial services.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.