Sumitomo Mitsui Hiring Barclays Private Bankers as Ties Endby
About 20 people to join bank’s SMBC Nikko unit in April
Will pay as much as 12 billion yen to terminate partnership
Sumitomo Mitsui Financial Group Inc. will hire about 20 private bankers from Barclays Plc in Japan as the two companies end a six-year alliance and the U.K. bank scales back its wealth-management business in the country.
The bankers will join the lender’s brokerage unit in April, said Kouichi Shibata, a spokesman for SMBC Nikko Securities Inc. in Tokyo. SMBC Nikko will pay as much as 12 billion yen ($104 million) to Barclays to terminate the partnership, he said in an interview.
Sumitomo Mitsui, which has been working with the U.K. bank on wealth management in Japan since July 2010, is ending the arrangement so that it can bolster the business alone using its lending and brokerage units. Barclays has been paring operations in Japan and elsewhere in Asia as part of global cost cuts to boost profitability.
The Japanese bank plans to hire more wealth managers from competitors and transfer employees from other divisions to strengthen the operation, Shibata said. Barclays will continue to provide Sumitomo Mitsui with financial products for its wealth business, the Tokyo-based financial group said in a statement earlier this week.
“Barclays’s commitment in Japan won’t change, and business in the Asia region will remain important,” Emi Nakata, a spokeswoman for the U.K. bank in Tokyo, said by phone. She declined to comment on the bankers’ move and the settlement with SMBC Nikko. Barclays’s major operations in Japan include investment banking, trading and research.
London-based Barclays sold its wealth-management units in Hong Kong and Singapore last year. The bank also cut about 100 positions in Japan as it withdrew from the equity business in the nation.
SMBC Nikko has 450 billion yen of wealth assets under management, according to Shibata. The brokerage earns about 3 billion yen of pretax profit every year, Shibata said. It targets clients with more than 500 million yen of investable assets.
The settlement charge dented SMBC Nikko’s profit last quarter. Net income fell 59 percent to 4.3 billion yen in the three months ended Dec. 31 from 10.6 billion yen a year earlier, results showed Friday.
While Sumitomo Mitsui has increasingly been targeting affluent Japanese, foreign banks have been pulling out after finding the market a difficult one to crack. In 2015, Sumitomo Mitsui bought Citigroup Inc.’s local consumer bank to get more business from well-off individuals in the nation, where households have $15 trillion in financial assets.
HSBC Holdings Plc withdrew from private and retail banking in Japan in 2012. Bank of America Corp. sold its stake in a private banking venture to its partner Mitsubishi UFJ Financial Group Inc. in the same year.