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SMBC Nikko to Set Up Abu Dhabi Branch

Sumitomo Mitsui Financial Group Inc.’s (SMFG) securities arm, SMBC Nikko Securities, looks to open a new office in Abu Dhabi. It aims to tap into the $80 billion debt capital market (DCM) in the Middle East. 

SMFG’s brokerage division is the first among Japanese brokerage firms to set up an office in Abu Dhabi. Other brokerages already have offices in neighboring Dubai. 

Nomura Holdings Inc., as well as the brokerage units of Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., have offices in Dubai.

SMBC Nikko Securities chief executive, Yuichiro Kondo, said they are aiming to open a business location in Abu Dhabi, not Dubai, because their group’s banking unit has a strong network there.

SMBC Nikko Focuses on Overseas Expansion

The move came as the COVID-19 pandemic weighed on Japan’s economic growth potential. This prompted Japanese brokerage firms to put more attention onto their overseas strategies. They then also  hoped to raise revenue abroad through this.

SMBC Nikko’s overseas operations brought in ¥15.3 billion ($143 billion) before taxes in the year ending in March. The securities unit seeks to see a twofold increase by the year, ending in March 2023.

The securities division is expected to start work in the biggest member of the United Arab Emirates (UAE) federation as soon as possible, according to Kondo, although he stated that it was hard to determine how long the regulatory approval process would take due to the coronavirus pandemic. 

Kondo also said they are considering establishing an office in Paris to tap DCMs in France and other Southern European countries like Spain and Italy. The Japanese brokerage unit already has a business location in Frankfurt.

Japan’s DCM amount to ¥15 trillion ($140.07 billion) in the previous fiscal year.

Kondo also intends to continue his predecessor’s plans to launch private-banking services in Singapore this 2020. While the exact date has not been confirmed as a result of the global health crisis, Kondo expects to start by September.

SMBC Nikko, according to Kondo, can afford to expand abroad. This is because relatively controlled overseas investment in the past has left it the capital needed to take extra risks. However, that does not mean the firm will lax in managing expenses.

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