SG sees private bank growth in Japan

Alain Simon, President and Chief Executive of SG Private Banking Japan, speaks at the Reuters Global Wealth Management Summit in Tokyo October 6, 2009.

TOKYO (Reuters) - Societe Generale (SOGN.PA) aims to add 200 to 300 new private banking clients in Japan a year and return annual asset growth to the 20 to 30 percent clip it was enjoying before the financial crisis, the head of the business said.

Alain Simon, president and chief executive of SG Private Banking Japan, also told the Reuters Global Wealth Management Summit that it may seek to restart talks with regional banks on potential alliances to help it expand its client base.

Societe Generale entered Japan's private banking market in 2002 by buying the Japanese operations of Chase Trust Bank, and had enjoyed strong asset growth before equity markets crashed last year.

SG Private Banking's assets under management dropped by 7 percent to 543 billion yen over the 12 months to the end of June, Simon said.

He hopes to boost that figure to 580-600 billion yen ($6.5-$6.7 billion) over the next year and reckons he can get the bank growing at an annual rate of 20 to 30 percent again as long as the economy and financial markets continue to perform well.

"We believe this is feasible given the greater risk appetite which we can already see with our clients and also the adjustment we have made to our products and services," Simon said.

SG Private Banking has about 1,400 clients in Japan with an average account size of $3 million.

Simon said that SG had started offering fund products with no hedge fund exposure and structured deposits of shorter durations to meet demand for less risky products.

ROCK BOTTOM

Japan is home to more than half of the high net-worth individuals in the Asia-Pacific region and is thought to hold solid growth potential with most of the country's about $15 trillion in household assets parked in low-yielding deposit accounts.

Simon said the business would probably only manage to break even on an operating basis in its financial year to March, partly because its clients had put a good portion of their assets in cash generating a very small return.

But he said their appetite for risk is starting to return, noting strong demand for a fund product called "rock bottom" that invested in stocks that had fallen sharply in value.

"We are now seeing a reversal although it is not drastic. They are conservative people. They are coming back into investment but in a progressive manner," Simon said.

SG's competitors in Japan include UBS (UBSN.VX), HSBC Holdings (HSBA.L) and Credit Suisse (CSGN.VX) as well as Japanese banks Daiwa Securities (8601.T) and Mizuho Financial Group (8411.T).

Simon said SG Private Banking was aiming to increase its client base by 200 to 300 a year. One of its key advantages is its ability to offer wealth transfer, wills and other trust services to owners getting ready to pass on their assets to the next generation.

And while SG was not actively seeking acquisition opportunities in Japan it may look to restart talks with regional banks which had fizzled out due to the financial crisis.

"We are aiming at starting some cooperation with some of the regional banks, which are not in a position to build their own private banking expertise but would need to provide the private banking services to some of their clients," Simon said.

(Reporting by Nathan Layne; Editing by Muralikumar Anantharaman)