MUFG is hiring more bankers in Japan wealth management push

[TOKYO] Japan’s largest bank is recruiting more new graduates and experienced specialists as it seeks a bigger piece of the country’s growing wealth management market.

Mitsubishi UFJ Financial Group (MUFG) is planning to increase annual hiring to about 40 new graduates for its business catering to the rich from April next year, according to Yutaka Miyashita, head of the lender’s commercial banking and wealth management business group. That compares with around five hires a year recently.

“Simply put, we are rather short of hands,” said Miyashita. “The market value of our clients’ assets has been expanding in line with global macroeconomic trends. This is a growing market.” The wealth operations employ about 4,000 people.

MUFG is targeting clients with at least 300 million yen (S$2.6 million) in total assets. The bank estimates that about 300,000 of its account holders fit that description.

A bullish Japanese stock market and recovering real estate prices have pushed up the number of rich clients in recent years, according to bank officials, but hiring has not kept pace with the rebound.

Wealth management has become one of the strategic focuses for MUFG and its Japanese competitors as they look for ways to boost fee income, seen as offering a more stable revenue generator than deal-making or trading operations.

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MUFG sees scope to gain more clients in this area from its existing wealthy depositors, Miyashita said.

“We have been able to meaningfully engage with only one-third of them so far,” he said. “We have a lot more space to grow.”

Attracting rich customers is seen as key to a broader shift to the fee-based model with the goal of increasing clients’ assets under management, rather than trying to raise the frequency of transactions. Charging fees based on the number of trades has been criticised for the potential to lead to so-called churning – getting clients to buy and sell assets at an excessive pace.

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Backing the shift to this strategy is the government’s multi-year drive to get households to invest more. Rising consumer prices that threaten to reduce the inflation-adjusted value of household assets are also encouraging investors to diversify their holdings.

MUFG is targeting areas such as estate planning for ageing business owners and their successors, and looking for startup founders as potential wealth clients, according to Miyashita.

In building up its wealth management business, MUFG does not have to look far for successful models. Its partner, Morgan Stanley, has transformed itself into a powerhouse in the sector under former chief executive officer James Gorman. MUFG has about 20 per cent stake in the US bank.

Miyashita said that MUFG is getting wealth management know-how from Morgan Stanley, including sending trainees to New York to gain hands-on experience from the Wall Street bank’s operations. BLOOMBERG