Yamaguchi Financial Group Inc., a regional lender based on the western edge of Japan’s largest island, is contemplating offering competitive compensation packages to new hires with expertise in the securities market, similar to those offered by the nation’s largest banks.
Competition for financial talent, particularly bond traders and other specialists, is heating up as the Bank of Japan raises interest rates, leading to increased trading volatility and opportunities in the market. Salaries for positions such as bond and foreign exchange traders and sales roles at major Japanese banks can reach up to ¥13 million ($80,500) according to recruitment websites like doda and Kotora.
“We don’t want compensation to be a barrier to hiring market specialists,” said Keisuke Mukunashi, CEO of Yamaguchi Financial. “We are prepared to offer compensation that is competitive with Japan’s largest banks.”
Regional banks in Japan are seeking to bolster their revenue from securities investments amidst challenges posed by a shrinking and aging population, which limits business growth in their respective areas. However, a shortage of experienced market professionals at these banks increases the risk of investment losses.
Rikako Onishi, president of Tokyo-based recruitment firm Kotora Co., noted that regional banks in Japan are increasingly hiring mid-career professionals for their market divisions. She emphasized the necessity for these banks to strengthen their asset-liability management capabilities in response to recent volatility in currency and rate markets, which has resulted in losses for some institutions.
A report from Japan’s financial regulator highlighted the urgent need for regional banks to expand their pool of experienced professionals capable of navigating rising interest rates. According to the Financial Services Agency, market-related staff constitute only 2% of employees at surveyed regional lenders.
Yamaguchi Financial itself faced challenges in the fiscal year ended March 2022, reporting a ¥13 billion net loss primarily due to fluctuations in US and European interest rates. The bank responded by establishing a risk management committee and has since seen a recovery in the value of its securities holdings.
Securing qualified human resources remains a significant hurdle for Japanese financial institutions, particularly for regional lenders like Yamaguchi Financial, which must persuade candidates to relocate from major cities like Tokyo to locations such as Shimonoseki, known for its seafood and culture, but distant from metropolitan centers.
Despite the smaller size and broader operational scope compared to Tokyo-based giants like Mitsubishi UFJ Financial Group Inc., Yamaguchi Financial is actively recruiting talent from larger banks. The company has already hired mid-career professionals for its Tokyo-based market division and plans to recruit an additional 85 mid-career employees this fiscal year, in addition to 152 recent graduates hired in April.
“In the future, we aim to achieve a balance between mid-career and new graduate hires,” Mukunashi stated, indicating plans to detail these goals in the bank’s upcoming mid-term plan starting in April.
(Additional reporting by a recruitment firm president and insights from an FSA report are included.)
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