Overview
A reform push by the Japanese government for the country’s $5 trillion asset management industry has prompted top Japanese banking groups to strengthen their long-neglected asset management businesses. The regulator’s call for assistance aligns with Japan’s policy to encourage households to invest their dormant savings. As the end of long-lasting deflation approaches, banks see asset management as a potential major profit center if households shift their money into stocks, bonds, and other assets to hedge against inflation. Mitsubishi UFJ Financial Group aims to make asset management its fourth pillar alongside banking, trust banking, and brokerages, with the goal of doubling assets under management to ¥200 trillion by March 2030.
Government Reform Efforts
After years of struggling to change household investment habits, the Japanese government is renewing its efforts, cautioning that cash holdings will lose value in an inflationary environment. However, concerns have arisen about the under-resourcing of the asset management industry, which is largely dominated by those affiliated with large financial groups. To demonstrate commitment to the reform drive, Sumitomo Mitsui Financial Group plans to shift bankers from proprietary trading to asset management, while Sumitomo Mitsui Trust Bank intends to invest ¥500 billion to expand its asset management business by 2030, including acquiring boutique asset management firms.
Focus on Private Asset Markets
Both Sumitomo Mitsui Trust Bank and Mitsubishi UFJ are eyeing opportunities in private asset markets. Sumitomo Mitsui Trust Bank aims to grow in private asset markets such as private equity, private credit, and infrastructure, enabling a wider range of clients to access illiquid assets in Japan. Meanwhile, Mitsubishi UFJ, which recently acquired AlbaCore Capital in London, is actively seeking further M&A opportunities in private asset markets. While investing in private assets can yield higher returns, it has not gained traction in Japan due to the decades of deflation. However, with the emergence of inflation, the urgency for investment is increasing among the population.