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Credit Suisse is buying HSBC's private banking business in Japan for an undisclosed sum to expand its presence in the world's third-largest economy. 
The value of the gross assets involved is about US$2.7 billion. HSBC said the sale was part of its plan to dispose of  non-core assets. 
Credit Suisse, which started its private banking franchise in Japan in 2009, said it would integrate HSBC's clients and staff into its private bank. 
'Private banking is Credit Suisse's core business and continues to be our key engine of growth and value,' said Marcel Kreis, head of Asia-Pacific private banking at Credit Suisse.  
Asia is among the fastest-growing regions for the Swiss bank's private banking business, according to Kreis. 
While Asia-Pacific is a competitive region for private banks, not all have been keen to enter Japan's private banking market. 
'Japan remains a question mark for many banks,' said Kenny Lam, a McKinsey partner who specialises in private banking.  
'In terms of wealth under management, Japan ranks in the top three in Asia, but the clients are quite dormant and banks often find that there's not a lot that they can do.' 
Lam said fierce competition from Japanese banks and a lack of connections to wealthy prospective clients were  among the challenges that deter foreign players. 
Indeed, many banks have found Japan's market tough. In 2004, Citibank closed its Japanese private banking unit because of regulatory breaches. 
Nevertheless, Credit Suisse said it was determined to build a leading private banking business in Japan, and Kreis said the acquisition was a long-term investment.
Since 2008, Credit Suisse has increased its net new assets by 41.6 billion Swiss francs (HK$346.6 billion) - accounting for more than 25 per cent of its net new assets - thanks to Asia's strong economic growth. Despite intensifying competition, Credit Suisse increased its net new assets by 9.5 billion Swiss francs in Asia in the first nine months of this year.
That's thanks to its strategy of collaborations between its private banking, investment banking and asset management businesses, Kreis said.
And by taking fewer risks than its rivals, Credit Suisse has achieved an average return on equity - a rate of return on shareholders' equity - of 14.9 per cent since 2009, Kreis said.
As part of its bid for growth in Asia, Credit Suisse will continue to expand its wealth management businesses in Hong Kong and Singapore as well as its existing franchises in Japan and Australia. 
For its part, HSBC said it would continue to offer retail and corporate banking services in Japan, and that it remained an important market. 
The acquisition, subject to regulatory approvals, is expected to be completed in the second quarter of next year.



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HSBC

Credit Suisse in deal for HSBC Japan unit