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

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).

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