UBS To Tap Into Japan's $17 Trillion Wealth Through Mitsu Joint Venture

UBS Joint Venture
A view of the signange outside UBS Business University which houses their innovation center Evolve in Singapore (Photo: Reuters / Edgar Su)

The world's largest Swiss banking institution, UBS Group AG, is in the process of signing a deal with Japan's Sumitomo Mitsui Trust to start a joint venture company that will tap into the country's $17 trillion wealth.

According to the Japanese bank, the new company will be established by 2021 after both companies have ironed out all of the details.

The planned joint venture company will be majority-owned by UBS, which will hold a 51 percent stake. Mitsui Trust, on the other hand, will hold the rest of the 49 percent stake in the new company. The new firm will expand both companies' wealth management offerings in both countries. UBS is reportedly aiming to target Japan's estimated $17 trillion in household assets.

According to an internal memo that was released to UBS employees, the proposed deal is set to be signed in Zurich by both of the companies' respective CEOs.

The deal will include the expansion and creation of new investment offerings that will target ultra-wealthy customers from both countries. USB is the latest foreign-owned asset management company to establish its presence in Japan.

UBS Country Head Zenji Nakamura mentioned in a released statement that he expects both companies to established Japan's first "one-stop shop" for the wealth management needs of their more affluent customers.

The executive further elaborated that through the combined efforts of both institutions, the company should be able to provide more comprehensive products.

UBS currently manages more than $2.4 trillion in investments from its customers. However, the company has recently been experiencing stagnation within its flagship business. The move to expand into other territories should give UBS new opportunities to turn around its business, especially given Japan's largely untapped wealth.

Japan is currently the world's third-largest economy, right behind China and the United States. Asset managers have long been trying to tap into the country, which boasts a substantial amount of wealthy individuals. According to the Bank of Japan, personal finances in the country have reached more than $17 trillion. The number of wealthy households in the country is also continually increasing.

UBS CEO Sergio Ermotti announced last week that the company is now looking into expanding its tie-ups overseas to encourage growth in its flagship business. Ermotti explained that such partnerships would boost its "wallet share" with clients as well as attract more investors.

Through the partnership, current UBS clients will be able to get access to Mitsui's various offerings including its trust and real estate services. This will also work the other way around, with Mitsui clients soon being able to get access to UBS' offerings such as securities sales and securities trading.

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