International entrepreneurs can expect to receive a wide range of corporate and private banking services in Japan. The Bank of Japan is the government authority responsible for maintaining the stability of the financial system and issuing bank licenses. In 2007, almost 70 foreign banks were licensed by the Bank of Japan to operate in the country.

Customer service standards in Japanese banks are generally high. However the majority of transactions are conducted in Japanese. Consequently, non-Japanese speakers find dealing with banks when opening a Japan corporate bank account challenging.

i) Internet banking to view online transactions, execute payments to third parties locally and overseas. Most Japan corporate bank accounts impose no limits on wire transfers to third parties;

ii) ATM cards and credit cards to support the Japan corporate bank account;

iii) Telephone banking facilities to enable funds transfers, check account balances and pay bills;

iv) Business loans – Japan has the lowest base interest rate (0.5%) of any developed economy, making it cheaper for firms to fund their investment plans.

The Japanese banking sector is competitive and the Bank of Japan enforces high banking standards. Although Japanese financial institutions reported heavy losses in 2007 due to the US subprime loan crisis, the sector benefits from: 

i) Increased assets under management – in 2006, total assets under management in Japan were 343 trillion yen (US$3.1 trillion), up 50% on 2001. France’s Societe Generale reports assets under management in Japan growing by 30% annually to 650 billion yen (US$5.5 billion) in 2007;

ii) Private banking sector growth – in 2007, Japanese households held just 19% of their assets in bonds and other securities (53% in the USA), preferring to save than invest. However, an increasing number of Japanese citizens are now investing rather than saving. Many Japanese workers receive a large lump sum payment (often more than US$1 million) from employers upon retirement, and these retirees require private banks to manage their wealth;

iii) Japan is also home to a large number of wealthy  individuals. In its Asia Pacific Wealth Report 2007, Merrill Lynch and Capgemini confirmed the number of millionaires in Japan reached 1.5 million. Consequently, Citigroup, the largest US bank, says it plans to hire ‘hundreds’ of employees in Japan in 2008 to sell investment products to affluent customers. Furthermore, the bank plans to increase the number of branches in Japan from 31 to 50. Meanwhile, HSBC plans to expand its branch network from 2 to 9 in 2008. Demand for both personal and corporate bank accounts is therefore set to increase.