Goldman Cuts Japanese Prime Brokerage, Boosts Hong Kong

Jul 12 2012 | 10:22am ET

Japan's biggest prime broker is getting smaller—by choice.

Goldman Sachs is cutting back on its prime brokerage operations in Japan, punctuated by the planned exit of the unit's head. Toru Okabe will leave the bank by the end of the month as it shifts some of its staff and operations to Hong Kong.

"The industry as a whole is operating increasingly on a Pan-Asia basis and we are relocating our resources to better meet with clients' needs," a spokeswoman for Goldman Sachs Japan, Hiroko Matsumoto, told Reuters. "We are putting more resources into the business across the region and our commitment to our clients, including those in Japan, remains unchanged."

Goldman moved its Japanese stock lending desk from Tokyo to Hong Kong in May, merging it with its Asia stock lending operation. The bank also plans to move its annual Asian hedge fund conference from Tokyo to Singapore this year.

Goldman is Japan's largest prime broker with US$2.7 billion in assets, according to Asia hedge. But the Japanese hedge fund industry is in a slump and has struggled to attract new capital as other Asian hedge funds have done; Japanese funds manage only about one-third of the amount they did in 2006.

Okabe is a 12-year veteran of Goldman's Japan prime brokerage. He joined the bank in 1997 from Nomura Securities.

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