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Japan's Largest Bank Plans Online Brokerage Venture

The Bank of Tokyo-Mitsubishi (BTM) has announced that it will set up an online brokerage in partnership with TD Waterhouse Group (TDW).

The joint venture, tentatively to be named BTM-TD Waterhouse Securities, will offer Japanese investors a range of financial services, including discount securities brokerage services, equity trading, and other financial products, via the Internet and other channels. Pending regulatory approval, the venture will commence operations in spring of next year.

Plans are for the new firm to be owned 55 percent by The Bank of Tokyo-Mitsubishi and 45 percent by TD Waterhouse, a unit of Canada-based Toronto-Dominion Bank, although BTM affiliates Tokyo-Mitsubishi Personal Securities and Kokusai Securities may also invest.

Stephen McDonald, CEO of TD Waterhouse, said the vision of the joint venture "is to serve the increasingly sophisticated investor who wants a broad range of financial services [taking] advantage of the speed and accessibility of the Internet."

"This partnership will provide us with the opportunity to develop and offer a wide array of financial services", meeting the needs of Japanese investors, McDonald said. The new firm will initially be capitalized at 5.5 billion yen (US$53.4 million), possibly increasing to 10 billion (US$97.1 million) in 2001.

A BTM official said the bank expects the joint venture to achieve profitability in its fourth year of operations. BTM hopes to take advantage of TDW's expertise in online financial services to strengthen marketing efforts for its own products.

TD Waterhouse is the world's second-largest discount broker, with more than $122 billion in assets under administration and some 3 million customer accounts worldwide. BTM, with total assets of 68 trillion yen (US$660 billion) and deposits of 40 trillion yen (US$388), is Japan's largest bank.

The partners aim to capitalize on the popularity of the Internet and the growth of online trading by individual investors that has been spurred by the deregulation of trading commission fees in October.

BTM-TD Waterhouse Securities will join a host of joint venture online brokerage services that have launched recently, including E-Trade Japan (by Softbank and E-Trade), DLJdirect SFG Securities (by DLJdirect, Sumitomo Bank, and others), and Nikko Beans (by Mitsui Trust and Banking, Nikko Securities, and Nippon Life Insurance).