TOKYO -- Japan Post Holdings will partner with Daiwa Securities Group to create new investment products, seeking additional fee revenue for its banking unit to shore up profits eroded by years of low interest rates, Nikkei has learned.
Under an agreement to be announced Wednesday, Japan Post Bank and Daiwa Securities will work together to develop mutual fund wraps, which are accounts managed by a financial institution based on customers' investment goals. These products -- a first for the bank -- will be marketed at 233 directly operated Japan Post Bank branches and more than 1,500 large post offices.
The bank will apply for government approval as early as fall, aiming to begin sales in 2021.
Japan Post Group has also looked to develop investment trust products through a joint asset management venture with Sumitomo Mitsui Trust Bank and Nomura Holdings set up in 2015, but that company has yet to attract significant amounts of customer assets. This spurred the postal group to look to wrap accounts, which provide a steady stream of income through regular fees.
Japan Post Bank plans to expand its securities and mutual fund business going forward, mainly through partnering with Daiwa. The tie-up also benefits Daiwa, which can leverage the bank's huge branch network and high reputation among customers outside Japan's main urban centers as it grows its own business.
The arrangement follows a falling-out between Japan Post and Nomura Holdings after the former's failed 2017 bid for developer Nomura Real Estate Holdings. The postal group chose Daiwa as one of the lead underwriters for a Japan Post Insurance share sale last month while snubbing Nomura.