Japan looks likely to allow U.S. Banks toconduct securities business here, a move that will probably
cause the barriers separating Japanese commercial banks from
brokerage houses to break down, financial analysts said.
    But the timing of the approval remains uncertain, due to
conflicting domestic interests.
    J.P.Morgan and Co &lt;JPM>, Bankers Trust New York Corp &lt;BT>,
Manufacturers Hanover Corp &lt;MHC> and Chemical Bank New York
Corp &lt;CHL> are expected to win approval to conduct securities
business in Japan, U.S. Bank officials said.
    "There is no reason for extended delay of approval," one
official at a U.S. Bank said. The four U.S. Banks have been
seeking finance ministry approval for months.
    To date, Japan has allowed European banks to do securities
business here through 50-pct owned subsidiaries. As Japanese
banks can conduct securities business in European countries,
this was seen as a reciprocal move and did not pave the way for
Japanese banks to enter the domestic securities market.
    But if U.S. Banks win approval, Japanese banks will press
hard for similiar status, since they are not allowed to conduct
securities business in the U.S.
    Many U.S. Bank officials expect their applications to be
approved before June. But Japanese banking sources said the
decision will be delayed until next year. A spokesman for the
finance ministry declined comment.
    U.S. Bankers will meet with ministry officials for talks on
financial market deregulation sometime in the next few months.
Ministry sources said the talks are likely to be held in April
or June.
    At the last round of financial negotiations in September,
U.S. Officials said Japan's commitment to deregulation was
flagging.
    Analysts said the finance ministry has been seriously
considering the U.S. Request since the U.S. Federal Reserve
Bank of New York approved five new primary government
securities dealers, including two Japanese brokerages, last
December.
    They said the ministry will have to approve the U.S.
Request soon to head off criticism its markets are not as open
to foreigners as those of the U.S.
    Analysts said Japan has proceeded rapidly with financial
deregulation since 1984, but has not touched upon the clear
division between the securities and banking businesses.
    Japanese banks and securities houses have fought hard to
protect their interests, but analysts said the banks are
finding it increasingly difficult to earn money in traditional
fields.
    Officials of major Japanese banks said they will pay
special attention to the ministry's reaction to U.S. Bank
requests because approval would accelerate market
liberalization in Japan.
    The Japanese bankers hope approval will pave the way for
their own entry into the domestic securities market.
 REUTER
