DBS sees opportunity in Japan rate woes

The Singapore bank is planning to open a securities business in Japan, targeting an investor base burnt by the country’s negative interest rate policy.

DBS Bank is planning to open a securities business in Japan to appeal to an investor base that has been burnt by the country’s negative interest rate policy.

By whittling away an easy source of profits, the Bank of Japan’s decision earlier this year to adopt negative interest rates has thrown up a plethora of problems for domestic banks. Japanese investors, meanwhile, now have to work even harder to hit their yield targets. 

But for some foreign players, the move has created an opportunity. Those yield-starved Japanese investors should, after all, have greater reason to want to move offshore.

So DBS Bank thinks.

The Singaporean bank announced on Monday that it was opening a securities business in Japan, allowing it to sell directly to the country's institutional investors. DBS already has a representative office in Japan but it previously needed to channel any business through Singapore or Hong Kong.

Bank of Japan Governor Haruhiko Kuroda announced the negative interest rate policy in February, causing widespread confusion among domestic investors, issuers, and investors. Bankers and analysts are still divided on the likely ramifications of the policy — but its impact on bond yields has clearly been bad news for local investors. 

DBS says it can help those investors by introducing them to a variety of Asian credits. This could go as far as bringing foreign companies to Japan on roadshows.

The securities business will be managed by Mana Nabeshima, DBS’s Japan country head. She was already in charge of the office in the country — and helped DBS win the new license — but now looks to have an expanded brief.

She will split her time between Tokyo and Singapore, as she did before DBS won the license.

Nabeshima was previously a managing director in the fixed income team at Goldman Sachs, working with institutional investors. She joined DBS in March last year.

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