Merrill-MUFG Japan venture assets grow 20 percent

TOKYO (Reuters) - Assets at the Japanese wealth management venture between Merrill Lynch MER.N and Mitsubishi UFJ Financial Group (8306.T) grew 20 percent in 17 months on an influx of MUFG account holders, its CEO said on Wednesday.

Mitsubishi UFJ Merrill Lynch PB Securities Co., a 50-50 venture, managed 1.75 trillion yen ($14.9 billion) in assets at the end of September, up from 1.45 trillion at its launch in May 2006.

"We expect steep growth from here on," Chief Executive Junji Okabayashi told the Reuters Wealth Summit in Tokyo. "There's a lot of untapped and lucrative potential (through MUFG)."

Of the 6,000 new accounts the venture has won since it opened for business, about 5,500 came from introductions from MUFG, Okabayashi said.

Several hundred thousand of account-holders at MUFG, Japan's largest bank, have assets worth 100 million yen or more, and this is the pool of wealth the firm is targeting, he said.

Most of the growth in Merrill's private banking business was outside the United States last year, and the firm is eyeing wealthy people in Japan, who have been shy about investing since the bubble economy burst in the early 1990s.

"More people are conscious that pensions alone will not feed them," Okabayashi said. "An invisible psychological barrier is being lifted, allowing us to be more aggressive."

Japanese with more than $1 million in financial assets excluding their homes numbered 1.48 million in 2006, up 5.1 percent from the previous year, according to a June survey by Merrill and IT services firm Capgemini.

Asset management is on the rise in Japan, and retiring baby boomers and their nest eggs have bankers vying with each other for some of Japan's household wealth, 55 percent of which is held in cash.

Merrill's and MUFG's private banking firm started operations with 10,000 accounts inherited from Merrill's local retail business. The venture managed 16,000 accounts in September.

The company aims to lift its asset volume by several hundred billion yen every year and hit a profit of billions of yen in a few years.

Some 865,000 Japanese households have assets of at least 100 million yen, according to Nomura Research, and financial assets held by this group stood at 213 trillion yen as of March 2006.