TOKYO: Major Japanese securities companies are making tie-up approaches to regional banks, aiming to expand their sales channels for investment trusts and other financial products amid the toughening business environment in the financial industry.

Brokerage giant Nomura Holdings Inc. spearheaded such moves. It reached a basic agreement with San-in Godo Bank, based in the western city of Matsue, Shimane Prefecture, over a comprehensive tie-up in August last year.

Under their plans, San-in Godo Bank will scrap its brokerage unit and the bank itself will sell investment trusts and other financial products.

Nomura will select financial products and manage securities accounts for the regional bank.

Nomura also reached an agreement with Awa Bank in the western city of Tokushima in January this year.

Major online financial service provider SBI Holdings Inc., which has an online brokerage subsidiary, is more eager for business tie-ups with regional lenders.

SBI aims to form a coalition with regional banks. It has already concluded business tie-up deals with Shimane Bank in Shimane Prefecture, western Japan, Fukushima Bank in the northeastern prefecture of Fukushima, Chikuho Bank in the southwestern prefecture of Fukuoka and Shimizu Bank in the central Japan prefecture of Shizuoka.

Emerging as the top shareholder of Shimane Bank, SBI acquired the bank's investment trust counter sales business and commissioned sales in Shimane Prefecture to the bank. SBI plans to focus on providing financial products and managing securities accounts.

Tokai Tokyo Financial Holdings Inc., a midsize securities firm, is also considering business tie-ups with regional banks.

Major securities firms face the abolition of commission fees for buying and selling investment trusts and worsened profitability in sales for individual customers at regional branches due to population drops.

For their part, regional lenders have aimed to expand commission revenue mainly through sales of investment trusts. But their product lineups are not as attractive as those at major banks, and regional banks shoulder related administration costs as well.

Still, "we cannot stop asset management operations as we put top priority on customer service," a senior official of a regional bank said.

There are strong concerns among regional banks that major securities firms may take advantage of them, but regional banks have no choice but to do something amid decreasing profits due to population drops and ultralow interest rates.

Stroger ties between securities firms and regional banks "make business sense and can 'kill several birds with one stone,'" said Keiichi Ohara, president of Japan Asset Management Platform Group Co., which offers consulting services to financial institutions.

"Such moves will spread in the future for sure," he said.

JIJI Press