Domain Destruction
Competition between banks and securities companies is expected to be heating up as they are likely to be allowed to do discretionary investment business and payment and settlement business related to corporate bodies from next year, respectively. Banks are expecting that they will be able to beef up their wealth management part by means of discretionary investment and securities companies can penetrate the enterprise market, banks’ home turf, by directly attracting large corporations’ funds and the like.
Banks are in favor of the new policy because it can be a new opportunity for profitability improvement. Securities firms, on their part, are looking forward to a new chance in the field of corporate wealth management. According to the policy, corporations can maintain their cash and cash equivalents in cash management accounts as well as savings accounts, and this can result in the comprehensive management of corporate assets by diverse means. In addition, securities companies can take part in corporate profitability management by utilizing their private equity funds, hedge funds and so on while taking a bigger role than before during the course of M&A transactions.
“Once the scope of the payment and settlement business of stock firms is expanded to cover the corporate sector, they will be in fierce competition with banks over the main accounts of enterprises,” said an industry expert.