UBS targets wealthy elite in Japan

TOKYO (Reuters) - Swiss bank UBS (UBSN.VX) is expanding its wealth management business in Japan, bringing its brand of tailored banking to the rich of the world's second-biggest economy.

UBS, the world's biggest wealth manager, is in its third year of operation in Japan and is busy pulling in new clients.

"We have been opening accounts on a daily basis" said Jean-Claude Humair, head of wealth management at UBS Japan.

The task has been made easier by a greater sense of adventure amongst Japanese investors, famed in the past for hoarding cash and property. Humair added the recent crisis in credit markets created opportunities for his clients to enter new fields at discount prices.

"Japanese investors are more open to diversifying their wealth across products, asset classes and geographies," he said.

Japan's new Financial Instruments and Exchange Law (FIEL) has also made his life easier.

"The FIEL is positive for the development of the wealth management industry in Japan as it sets proper guidelines for all financial institutions to follow and it will increase investors' confidence in financial institutions."

Globally, UBS has a 3.5 percent market share in wealth management and said it had 862 billion Swiss francs ($726.8 billion) under management at end 2006.

About $124 billion of that pie is invested in the Asia Pacific, taking it to pole position amongst the banks. UBS is keen to nurture this growing area of its business which has half the world's population but contributes only a quarter of its GDP.

Japan is key to its strategy in the region, where the wealthy are sitting on about 300 trillion yen ($2,573 billion), according to its own research.

The Swiss bank is courting the cream of the wealthy in Japan; high-net-worth individuals with financial assets in excess of 200 million yen ($1.7 million), and the super wealthy with more than 5 billion yen ($43 million) at their disposal.

This elite comprises just 500,000 households, less than 1 percent of the Japan's population, fitting the rarefied billing of private banking.

Managing such wealth for a fee is a glittering prize, but convincing investors renowned for their conservatism to hand over their assets is proving slow work.

"In Japan the concept of wealth management is relatively new," said Humair.

UBS is particularly targeting entrepreneurs in the import-export business whom they have found more open to dealing with a foreign bank and more adventurous in their investments.

FINISHING SCHOOL FOR BANKERS

UBS has encountered another obstacle in its drive to husband the money of Asia's wealthy: a dearth of private bankers.

In Switzerland, Humair's home, the concept of bankers fluent in finance, able to hobnob with the rich, while emanating an air of discretion is well entrenched. But in Asia, UBS has had to widen its head-hunting network into other fields such as corporate finance.

UBS has also set up a campus in Singapore during April this year to groom its future bankers in Asia. In Japan, a similar one-year finishing school started in May.

UBS wealth management employees about 200 people in Japan, roughly a third of whom are client facing. It opened its head office in Tokyo in 2004, then in Osaka in 2006 and most recently an office in Nagoya in July this year.

Humair said he plans to spread UBS's reach out from these three centers, whose spheres of influence cover roughly 70 percent of the rich in Japan.

"It takes a number of years to be profitable. We can arrive at that conclusion drawing upon the experience of our wealth management initiative in Europe where it took about five years to become profitable."