Nippon Wealth (NWB), a new private bank that started operations in May 2015 in Hong Kong, plans to introduce structured deposits with foreign exchange-linked products, according to Kenichi Hasegawa (pictured), executive director and chief operating officer at NWB.
“We considered FX-linked products to be the first to introduce and are considering cross yen-linked (currency pairs of Japanese yen and other currencies, excluding the US dollar), given its good volatility that generates yield, which we will first launch as structured deposits,” said Hasegawa. “We are in the process of applying for a license to sell structured products and other securities, which is expected to be granted this summer.”
Despite the links between NWB and structured products providers Shinsei Bank and Monex Securities, which have a 60% stake in the new bank, “[NWB] will have its own products line-up,” according to Hasegawa. The bank already has Hong Kong-based financial institutions serving as its counterparties.
NWB has been granted a banking as well as an insurance agent licence, which means it is restricted to deposit-taking and selling insurance products as an agent. It has also announced a new bancassurance partnership with MassMutual Asia to deliver insurance products. Although variable annuities (VAs) have been gaining traction in Japan, Hasegawa does not see strong enough demand. “Given the restrictions, such as Japanese investors not being able to purchase insurance products overseas, we would rather focus on funds or structured products,” he said/
Diversification will remain one of the major concerns for Japanese investors, who are looking for more exposure to global markets. “From what we have observed, exposure to Asian or the Chinese market through Hong Kong will fit investor interests,” he said. “Apart from Japanese investors in Hong Kong, there are also clients from other Asian countries, such as Thailand, Malaysia and China, inquiring about our service.”
The bank will focus on portfolio construction and Hasegawa said that, once it attains a licence, it will also distribute bonds and funds with global exposure. “It is a global trend, including Hong Kong, that bonds are used for portfolio construction. With the foundation set, and if the conditions allow risk to be taken, then there could be equity or equity-like assets included in the portfolio,” he said.
As wealth management expands across Asia, Hasegawa expects NWB to capitalise on its ability to offer an all-round service to investors who fall below the standard size requirement. “The entry standard for private banking is very high nowadays, varying from US$5m to US$10m, depending on the institution,” said Hasegawa. “However, Japanese investors with assets of several million dollars are the most populous and they are unable to enjoy the full private banking service from top tier institutions. They will be our main target.”
Hasegawa said that he anticipates that the bank will have JPY400bn ($3.2bn) in assets linked to financial products within five years.
NWB is a wholly-owned subsidiary of OJBC, which was established in August by Japanese and Hong Kong companies including Shinsei Bank, Monex Group, AD Capital, Convoy Financial Holdings and Tokyu Livable. Shinsei Bank is the largest shareholder, with a 50% holding in the new bank.
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