Equities

Yamaguchi Bank Offers $80.5K Salaries, Targets Record Profits

Yamaguchi Financial to Offer Up to ¥13 Million Salaries to Attract Market Specialists Amid Rising Competition

By Bill Bullington

7/10, 22:14 EDT
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Key Takeaway

  • Yamaguchi Financial Group plans to offer megabank-level salaries up to ¥13 million ($80,500) for market specialists amid rising competition and BOJ rate hikes.
  • The bank aims to boost revenue from securities investments, rebounding from a ¥13 billion net loss in FY 2022 to an expected record-high net income of ¥33 billion this fiscal year.
  • Recruitment challenges persist as regional lenders like Yamaguchi Financial strive to attract talent away from big cities, planning significant mid-career hires.

Yamaguchi Financial's Hiring Strategy

Yamaguchi Financial Group Inc., a regional lender based in Shimonoseki, Japan, is considering offering compensation packages for new hires with securities market expertise that are comparable to those at the nation's largest banks. This move comes as competition among financial institutions to hire bond traders and other specialists intensifies due to the Bank of Japan's gradual increase in interest rates, which is creating more trading volatility and opportunities for market professionals.

Salaries for bond and foreign exchange trader and sales jobs at the largest Japanese banks can reach up to ¥13 million ($80,500), according to recruitment websites such as doda and Kotora. "We don’t want compensation to be an obstacle" in hiring market specialists, said Keisuke Mukunashi, Yamaguchi Financial's CEO. "We’re ready to pay" compensation comparable to that of Japan’s biggest banks, he added.

The bank's strategy is driven by the need to generate revenue from securities investment as a shrinking and aging population limits business opportunities in their regions. However, the lack of expert market players at local banks raises the risk of investment losses. Yamaguchi Financial itself posted a ¥13 billion net loss in the fiscal year ended March 2022 due to a sharp rise in interest rates in the US and Europe, which prompted the bank to sell off its holdings of foreign bonds and mutual funds. In response, the bank established a risk management committee that includes outside experts.

Financial Performance and Outlook

Despite past challenges, Yamaguchi Financial has seen a rebound in the value of its securities holdings, which reached about ¥2 trillion as of the end of March, up from around ¥1.34 trillion two years earlier. The bank expects a record-high consolidated net income of ¥33 billion in the fiscal year that started on April 1, driven by strong lending revenues and improved investment income on securities.

The broader Japanese banking sector has also faced investment challenges. Aozora Bank Ltd. reported its first loss in 15 years due to losses on foreign bonds and soured US office property loans. Similarly, Norinchukin Bank announced last month that it would sell $63 billion of low-yielding US and European government bonds that had become unprofitable.

Recruitment and Regional Challenges

Securing human resources is a common challenge for Japanese financial institutions, particularly for regional lenders that need to convince potential hires to move out of big cities. Yamaguchi Financial is based in Shimonoseki, a coastal city about 800 kilometers from Tokyo, known for its seafood, including the poison-containing pufferfish.

The bank has already hired two mid-career staff from Japanese banks to work in its market division based in Tokyo. It plans to hire 85 mid-career workers in various areas, including markets, this fiscal year, in addition to the 152 new graduates it employed in April. "In the future, we would like to bring the ratio of mid-career and new graduate hires to an even level," Mukunashi said, noting that the bank will provide the timing for achieving this goal in its next mid-term plan, starting in April.

Management Quotes

  • Keisuke Mukunashi, CEO of Yamaguchi Financial Group:

    "We don’t want compensation to be an obstacle in trying to hire market specialists. We’re ready to pay compensation comparable to that of Japan’s biggest banks."
    "In the future, we would like to bring the ratio of mid-career and new graduate hires to an even level."