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By Saeed Azhar and Chikafumi Hodo
December 21, 2011 9:28 AM EST
HSBC
HSBC's Japanese private bank arm fits that bill, having made a profit of just $2 million in the first half. The sale involves assets worth $2.7 billion out of a global private banking empire amounting to $416 billion in client assets at the end of June.
HSBC will remain in Japan, where it made a $25 million profit in the first half, mainly due to its investment bank.
Credit Suisse has a larger business in Japan than HSBC and should be able to benefit from cost synergies, one analyst said.
Junya Tani, Credit Suisse's head of private banking in Japan, said the deal showed its "commitment to build a leading private banking business in Japan."
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Bruce Weatherill, chief executive of consultancy Weatherill Executive Consulting, said: "The Japanese market is difficult for western private banks to penetrate, largely because of the cultural issues."
Even outside Japan, private banking is a tough business because the super rich clientele is highly demanding and has considerable pricing power.
HSBC Private Bank limits its services to customers with least $5 million to invest, a threshold that is lower in some markets. The Japanese unit sought clients with more than 200 million yen ($2.6 million) in financial assets, according to an official at HSBC Japan, who spoke on condition of anonymity.
"Serving this level of client profitably is not a bed of roses. They are more demanding and expect bespoke service at institutional prices," said Bill Yelverton, executive director at London based specialist consultancy Scorpio Partnership.
Some 60 staff work in HSBC's Japanese private banking business, and will be offered positions at Credit Suisse.
HSBC will retain HSBC Premier, the premium service for affluent -- rather than super rich -- clients who hold more than 10 million yen in assets, the official said.
The sale is part of a strategy outlined by chief executive Stuart Gulliver in May to cut costs by $3.5 billion.
Asia is a battleground for global and local private banks competing for market share in a region outpacing the United States and Europe in economic growth.
Powered by China and India, Asia-Pacific's millionaire ranks rose 10 percent to 3.3 million last year, just behind the 3.4 million in North America and ahead of Europe's 3.1 million, according to a Merrill Lynch/Capgemini Asia-Pacific report.
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