Credit Suisse has agreed to acquire HSBC's private banking business in Japan.

Credit Suisse, the second-largest Swiss bank, has agreed to acquire HSBC's private banking business in Japan for an undisclosed amount.

Under the terms of the agreement, all of HSBC's Japan private banking operations will be merged with Credit Suisse's own private banking unit. The firm said the acquisition strengthens Credit Suisse's wealth management capabilities in the country and expands client coverage through the integration of new offices in Osaka and Nagoya. Credit Suisse presently has an office in Tokyo. 

The value of the gross assets included in the sale was approximately $2.7 billion at 31 October, a statement from HSBC said.

The Japanese wealth management market has, traditionally, been a difficult one for non-domestic firms to penetrate, with only a relatively small number of banks, such as Credit Suisse, building a presence in the country. Measured in dollars, Japan has 1.7 million millionaires and is the single biggest market for high net worth individuals in the Asia-Pacific region, with 52.5 per cent of the region's millionaires and 38.2 per cent of its wealth as at the end of last year (source: BoA Merrill/CapGemini World Wealth Report).

"Building a private banking business in Japan is critical to ensuring we have a complete offering of integrated products and services. Clients in Japan, as they are around the world, are demanding that their banks offer private banking, investment banking and asset management services in a seamless manner. This acquisition is an important stepping stone," said Olivier Thiriet, chief executive designate for Credit Suisse Japan. 

At its investor day presentations held in May 2011, HSBC announced plans to realign its global focus and cut back on areas where it lacks scale. The bank is reportedly looking to slash annual expenditure by as much as $3.5 billion over the next three years and focus most of its Asia business on Hong Kong, China, India, Singapore, Malaysia and Indonesia. 

Since 2008 Credit Suisse's private banking unit in Asia-Pacific has generated some SFr41 billion ($44.1 billion) in cumulative net new assets, contributing to more than a quarter of the bank's global net new assets during the same period. 

The transaction is expected to close in mid-2012, subject to regulatory approval.