Amadeusz Juskowiak

Japan likely to let us banks deal securities

Japan looks likely to allow US Banks to conduct securities business here a move that will probably cause the barriers separating Japanese commercial banks from brokerage houses to break down financial analysts said

But the timing of the approval remains uncertain due to conflicting domestic interests

JPMorgan and Co JPM Bankers Trust New York Corp BT Manufacturers Hanover Corp MHC and Chemical Bank New York Corp CHL are expected to win approval to conduct securities business in Japan US Bank officials said

There is no reason for extended delay of approval one official at a US Bank said The four US Banks have been seeking finance ministry approval for months

To date Japan has allowed European banks to do securities business here through 50pct owned subsidiaries As Japanese banks can conduct securities business in European countries this was seen as a reciprocal move and did not pave the way for Japanese banks to enter the domestic securities market

But if US Banks win approval Japanese banks will press hard for similiar status since they are not allowed to conduct securities business in the US

Many US Bank officials expect their applications to be approved before June But Japanese banking sources said the decision will be delayed until next year A spokesman for the finance ministry declined comment

US Bankers will meet with ministry officials for talks on financial market deregulation sometime in the next few months Ministry sources said the talks are likely to be held in April or June

At the last round of financial negotiations in September US Officials said Japans commitment to deregulation was flagging

Analysts said the finance ministry has been seriously considering the US Request since the US Federal Reserve Bank of New York approved five new primary government securities dealers including two Japanese brokerages last December

They said the ministry will have to approve the US Request soon to head off criticism its markets are not as open to foreigners as those of the US

Analysts said Japan has proceeded rapidly with financial deregulation since 1984 but has not touched upon the clear division between the securities and banking businesses

Japanese banks and securities houses have fought hard to protect their interests but analysts said the banks are finding it increasingly difficult to earn money in traditional fields

Officials of major Japanese banks said they will pay special attention to the ministrys reaction to US Bank requests because approval would accelerate market liberalization in Japan

The Japanese bankers hope approval will pave the way for their own entry into the domestic securities market