U.S. Banks to Form Securities Firms in Japan : Joint Ventures Conform With Tokyo's Rules

From Associated Press

Several major U.S. banks and non-banking corporations on Wednesday announced plans to enter the securities business in Japan through joint ventures.

Japanese Finance Ministry authorities had announced overnight that the banks could apply for the appropriate licenses--which in Japan means the applications are virtually assured of being approved, bank officials said.

Among those announcing new ventures Wednesday were: Bankers Trust New York, joining with Exxon; Manufacturers Hanover, joining with Chrysler, and J. P. Morgan & Co., joining with Bechtel Investments Inc.

Chemical New York also said it intended to set up a securities business in Japan through Bank of New Providence, a Nassau, Bahamas, subsidiary, jointly owned with Lord Howard DeWalden, a British real estate investor.

The new ventures all were the result of Japanese regulations that virtually required the banks to enter marriages of convenience in order to enter the securities business in that country.

Those rules state that applicants for securities branch status that already have banking entities in Japan may apply only through an existing non-Japanese subsidiary that is not majority owned by a financial institution, an Exxon statement said.

Tom Parisi, a Bankers Trust spokesman, said the company had invited Exxon to acquire a half interest in its Hong Kong-based subsidiary, BT Asia (Securities) Ltd., which will apply for permission to open a branch in Japan.

Chrysler Interest

The joint venture will engage in the underwriting, distribution, trading and brokering of debt and equity securities, and is expected to be operational between mid-October and mid-November, he said.

Bill Smith, an Exxon spokesman, said the two companies each will hold a 50% interest in the venture. Each will nominate half of its directors, but Bankers Trust will be "the operating manager," he added.

Neither company would reveal financial details of the new partnership.

In Tokyo, Manufacturers Hanover said it would apply through its Manufacturers Hanover Asia Ltd. subsidiary for four licenses that would give it "full securities powers in Japan."

The company said Chrysler will acquire a 50% interest in the unit, which would concentrate on dealing, distributions and sales of foreign bonds, capital market service and asset-liability management, in addition to its present activities.

J. P. Morgan said it will apply for the appropriate licenses through a joint venture between its Singapore-based Morgan Guaranty Pacific Ltd. subsidiary and Bechtel Investments.

Under the proposed arrangement, San Francisco-based Bechtel would acquire a 50% interest in its subsidiary.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World