Uk, Japan Banks In Big Bang Alliance Talks

The move, announced Monday, highlights the growing attempts by foreign financial groups to expand into Japan before a planned wave of financial deregulation, known as big bang.

Andrew Simmonds, chief executive of Barclays in Tokyo, said: From Barclays perspective, big bang is going to lead to a lot of new opportunities and so the chance to work with a domestically orientated group [in Japan] is welcome.Barclays has had an investment banking operation in Japan for more than a decade. It also has a joint venture with Nikko for pension fund management which it took over from Wells Fargo last year.

Hokkaido Takushoku, also known as Takugin, is the largest lender in the northern Japanese island of Hokkaido. It has had severe financial problems in recent years, including Y933 billion (4.96 billion) of bad property-related loans from the 1980s.

Other foreign financial institutions are seeking closer ties with Japanese partners to offer sophisticated financial products to the countrys many savers and companies.

Elizabeth Daniels, financial analyst at Morgan Stanley in Tokyo, said: What the Japanese companies can offer is distribution ability and what the foreign ones have is product skills - its a question of teaming up product skills with the investor base.

Barclays and Takugin Monday said they had no plans for cross shareholdings as the alliance would not be exclusive.

Details will be discussed in the coming weeks and are expected to focus on :

* Securitisation, particularly the restructuring of Takugins Y9,523 billion worth of assets.

* Sales of investment trusts and other new financial products to Japanese retail savers through Takugins distribution network; Takugin reckons the Hokkaido public control some Y40 billion of Japans Y1,200 billion worth of savings.

* The provision of overseas services to Takugin clients, after the bank withdrew from its overseas network; Barclays is expected to help sell Takugins overseas assets and offer international bond underwriting services to its corporate clients. Last week the Japanese government announced a proposed timetable for big bang, which could trigger reform by next year.

The move, announced Monday, highlights the growing attempts by foreign financial groups to expand into Japan before a planned wave of financial deregulation, known as big bang