SG sees Japan profit as assets grow

By Alison Tudor and Brian Kelleher

TOKYO (Reuters) - The private banking arm of France's Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) expects to break even in Japan by the end of March as its assets under management in the world's second-biggest economy reach critical mass.

In Asia, the world's hottest region for private banking, Societe Generale sees the biggest hoard of untapped wealth lying in Japan. It aims for Japan to make up half of the bank's Asia Pacific assets under management in the next few years, up from 21 percent now.

"We expect to continue to grow assets under management at the rate of 30 to 40 percent per annum," Francois Barbe, the chief of SG Private Banking Japan Ltd, told the Reuters Wealth Management Summit in Tokyo on Wednesday.

Barbe, a former BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) banker who joined SG four years ago, expects assets under management to rise to 650 billion yen ($5.5 billion) by the end of 2007, up about 30 percent in the increasingly competitive market.

Of a potential market of 780,000 high-net-worth individuals in Japan who have more than 100 million yen ($850,000), SG only claims a 0.12 pct share. However, of the 40 richest families in Japan, who have at least $1 billion in assets, one-fifth have accounts with SG, Barbe said.

"We are more successful in the higher end of the market, where there is less resistance to foreign institutions and more openness to sophisticated services," Barbe said.

Barbe also has been exploring Japan's hinterland, saying 40 percent of its clients are based in cities such as Nagoya. The upside is that there is less competition and people have more time to listen to SG's pitch, he said. On the downside, SG is an unknown entity in those parts, he added.

Barbe is exploring agency agreements with regional banks, but no full-fledged alliances as the bank could not handle a sudden influx of 20,000 clients. Eventually it aims to set up offices in Osaka and Nagoya, Barbe said.  Continued...