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Corporate banker in Japan: ‘I don’t see much innovation coming out of the UK’ | Joris Luyendijk

A vice-president of a major western bank in Tokyo compares the banking cultures of Japan and the west

• This monologue is part of a series in which people across the financial sector speak about their working lives

We are meeting in the centre of Tokyo on a Saturday in January. Casually dressed for the weekend, he is a slender man in his early 30s with a fashionable haircut. He orders pasta.

“When I travel to New York, I am always struck by the percentage of Caucasians in the banks there. Here in Tokyo it’s overwhelmingly Japanese. But in London you have the whole world population represented. I may go to a desk in a major bank and not find a single English person on the team. They may be from India, from Lebanon, from anywhere. That’s London.

“My job is in corporate banking. I am the liaison between my bank and one major global Japanese company. Let’s call that company XYZ. Now XYZ has operations around the globe. It buys materials and half-products from lots of countries. It assembles and manufactures in lots of countries. It sells its own products across the globe.

“Imagine the money flows: across currencies, across time zones, across jurisdictions. Say XYZ wants to buy a factory in China. For tax reasons XYZ may have its ‘paper headquarters’ in a tax-haven like London, Amsterdam or Switzerland. This means that the payment has to go through there. So it starts in yen in Japan, is converted into sterling or Swiss francs or euros to originate in the country of the paper headquarters. Then it must be converted into dollars because Chinese renminbi must be paid for in this way. So the payment alone moves through four currencies, but at what conversion rate? You have different currency markets operating in different time zones. The yen market closes before the London market opens. On what day should the transaction be credited? How does the transaction look to different regulatory systems in the countries concerned?

“You need to agree on a fee for all this, provide certification … In a transaction like this there may be at least three other banks involved. And don’t forget the need for ‘local information’. In some countries official regulation can be quite different from how things are done in practice. I need to be aware of that and pass on relevant information to XYZ.

“This is just one example and you understand how global financial transactions get very complicated very quickly. And how a bank with global operations is at a huge advantage. When Japanese corporations expand overseas they cannot do so using Japanese banks as these lack such global networks. This is not good for Japan and we must work harder to change it. Japanese corporations could do more, too. I know of Japanese executives who take an English course but quit very soon; they decide they are just going to take an interpreter to wherever they are going.

“My day starts before 7am when I wake up and check my BlackBerry. It doesn’t really matter where I am to do work. My office phone is routed to my BlackBerry so it looks as if I am speaking from the office. On the commute I read stuff and work from the BlackBerry. I need to know what has happened while I was asleep, both in the world and with XYZ. Say there has been a flood in Thailand. Has that affected operations for the local XYZ activities?

“On a normal morning there are between 50 and 100 emails to go through. I usually get into the office around 9am and work till midnight, till just before the last train. Working hours often shift. When the XYZ office with which I am doing business is in a completely different time zone, you need to adapt your hours.

“For example, European banks are currently withdrawing from Latin America, because the crisis forces them to retrench. So I may get a call from the XYZ office in Brazil that they can no longer get a credit-line from their European bank. Can we support them? I get on the phone with the XYZ office in Brazil and in Tokyo, and with our local office in Brazil as well as with the people in our bank here in Tokyo who are responsible for Latin America.

“What it comes down to is client maintenance. Any request from XYZ headquarters here in Tokyo or a local subsidiary goes to me. I speak to my counterparts every day about activities, needs, demands, strategy … Co-ordination is key.

“There are interesting parallels between Japan and the UK. Both are islands with a limited and stable population. They have their own currency and they are a former power with lots of history. Their banks and corporations now make most of their profits overseas, which they repatriate for tax reasons.

“London is still the financial centre for the Europe and Mediterranean region. It helps how countries like India and other former British colonies have adopted many of the British laws, rules and regulations. That is of great benefit to London.

“Yet it’s unclear where London is going, what the regulatory climate is going to be. Also, I don’t see much innovation coming out of the UK these days. The bankers’ population may be very diverse. The products they come up with are rather old-fashioned.”

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