County NatWest withdraws from Tokyo exchange

COUNTY NATWEST, the investment banking arm of National Westminster Bank, yesterday became the first non-Japanese institution to withdraw from the Tokyo Stock Exchange since the market opened its doors to foreign brokers in 1986.

NatWest admitted that the Japanese subsidiary had made a loss in every year but one since it was founded in 1986. County NatWest Securities Japan said it was giving up its membership of the Tokyo and Osaka exchanges because of chronic deficits - a result of the market crash in Japan that has seen share prices fall 50 per cent in three years. Daily turnover is so low that even the giant Japanese stockbrokers are losing money.

Philip Augar, the London-based managing director of County NatWest Securities, said the withdrawal sprang from 'very heavy infrastructure costs and a very small market share'. He said securities business in Japan was deal-driven rather than research-driven.

NatWest's move prompted speculation that some of the 24 remaining foreign members of the TSE will follow suit. One competitor of NatWest said recently that it was losing dollars 1m a month on its Tokyo operations.

County's Japanese domestic equities business will be wound down over the next two to three months. Seventy of the 80 staff, who are mainly Japanese, will lose their jobs, while others will be transferred overseas.

County NatWest paid pounds 5m for its TSE membership when it joined in 1988. The exchange said yesterday that if it bought back the seat it would pay County about pounds 2.37m. But a new membership would cost considerably more and County indicated yesterday it would be willing to sell the seat to another institution.

The banking and bond business in Japan of County Natwest and the rest of the National Westminster group is profitable and is unaffected by the retreat from Japanese stocks, the bank said.

Two years ago Lord Alexander, NatWest's chairman, warned that unless County returned to profit within two years it would be shut or sold off.