Archive for the ‘Banking & Investment’ Category

All in the family: Keeping inheritances is a tricky business

Tuesday, August 23rd, 2011

A recent story reported by all the major media highlights a peculiar aspect of current household economics in Japan. In March, a home in Fukuoka City was broken into and ¥160 million in cash was stolen. One of the people who lived there, a 26-year-old woman, reported the robbery to the police, who have yet to catch the thief.

Wills are almost unheard of in Japan, which may be the problem

During their investigation the police wondered why the woman had such a huge amount of cash in her home. The usual reason is that there is almost no place to park that money these days. With bank interest rates remaining at zero indefinitely, more and more families just sock their money away in the mattress (or, in the Japanese idiom, the wardrobe). Mutual funds and other investment opportunities are available in Japan, but the average Japanese person tends to be averse to anything with risk attached.

In the case of the burgled party, the reasons were a little different. Investigators eventually learned that the ¥160 million was part of a ¥1.45 billion inheritance that the woman and her two older siblings received from their mother, who died in 2008 at the age of 64. The inheritance was made up of both cash and assets, including real estate, and had they properly reported it the three would have been liable for ¥544 million in inheritance taxes. As it stands now they will have to pay more, what with fines and penalties added on. In their case it’s even worse since they may be paying tax on ¥160 million they no longer have.

Continue reading about wills in Japan →

There’s gold in them there wardrobes!

Thursday, August 18th, 2011

If you've got bars of it, you're good as gold, but tooth filings and eyeglass frames will do. (Kyodo photo)

A term that has suddenly come to the fore in recent months is “urban mining,” the idea that there are precious metals in the everyday objects that surround us that can be recycled. The most prominent example is old cell phones, which contain both iridium and gold. There’s not enough in one to make its owner rich, but, for instance, a ton of ore from a gold mine typically gives up only 5 grams of real gold, while a ton of discarded cell phones could represent as much as 150 grams of gold.

Japan is generally acknowledged to have the largest potential urban mine of any country in the world. It is believed the general public possesses 6,800 tons of gold, mostly in the form of jewelry and accessories, but also in ingot and bar forms, not to mention “hidden” gold in electronics devices. (Many Japanese keep their old cell phones because they want to hold onto the data they contain.) That’s the equivalent of 16 percent of what is estimated to be all the “uncovered” gold in the ground worldwide. Silver is even more: 60,000 tons, or 22 percent of the amount still buried.

Continue reading about a new sort of gold rush →

Regional bank tries to make money work for good things

Sunday, June 5th, 2011

Small, regional banks have a tough time trying to get you to switch your business from megabanks, whose main benefit to average consumers is the fact that their branches can be found anywhere in Japan. More locally situated banks tend to grow up around local commercial customers, but they need average borrowers, too. The trick is: How do they make up for the lack of a widespread presence?

Jonan's Shibuya branch

One obvious solution is to offer services and products that other banks don’t, and in that regard Jonan Shinyo Kinko, which is headquartered in Shinagawa, Tokyo, is quite creative. Perhaps their most controversial gimmick is a “lottery savings account,” a deal that was apparently frowned upon by the Finance Ministry but which has been copied by some other small banks. If you keep a certain amount of money in a special savings account, the bank will buy lottery tickets for you, and they guarantee that your odds of winning are greater than if you bought the tickets yourself.

The latest product from Jonan (which means “south of the castle,” thus indicating Shinagawa’s position in relation to Edo Castle) is much more edifying. The bank believes that Japanese society is “not safe” as long as it relies so much on nuclear power for its energy needs, and wants to encourage not only conservation but also the promotion of renewable energy sources. For its own part, Jonan has pledged to reduce its own energy consumption by 30 percent over the next three years by resetting its air conditioners and heaters, applying energy saving fixtures and facilities, installing better insulation and buying into a self-generating power system for its own offices.

Then on April 28, the bank made an announcement that it would go even further. Customers could expect more beneficial interests rates on both savings accounts and loans if they could prove to the bank that they were making a concerted effort to be more energy efficient. For instance, a depositor who could show Jonan that he spent more than ¥100,000 on conservation devices such as solar systems, electrical rechargers, or LED lamps would receive an extra 1 percent in interest on savings accounts of up to ¥1 million. Given that most banks only give about 0.02 percent, it’s a sizable allowance. In addition, if a customer takes out a home improvement loan to boost the energy efficiency of his dwelling for amounts between ¥500,000 and ¥3 million, the loan will be interest free for the first year, and thereafter interest will be fixed at 1 percent for loan periods of 3 to 8 years. Most home improvement loans are around 3.5 percent.

Jonan isn’t the only bank that is trying to make a difference since the March 11 tragedy, though it seems to be the only one that has tied its sense of social responsibility to rewards for customers. Sony Bank currently offers limited time savings accounts with special interest rates, of which Sony will donate 0.01 percent to charity. Basically, it’s no skin off Sony’s nose. Jonan, on the other hand, puts its money where its mouth it.

Yen surge not as strange as it sounds

Tuesday, March 22nd, 2011

Last week, when all those foreigners bolted the country they got a nice little windfall from the ongoing crisis if they traded in all their hard-earned yen for whatever currency they’d need to get by back home. When markets opened after that nerve-wracking weekend the U.S. dollar, for instance, had lost up to ¥5 since the week before, from 82 to 77. A lot of people were dumbfounded, since such a reaction flies in the face of so-called textbook economics. Why would Japan’s currency get stronger as a result of such a disaster? Wouldn’t people be trying to unload their yen?

Whoops!

The easiest explanation for the surge was the idea of “repatriation.” Japanese companies with investments overseas in other currencies quickly exchanged much of their holdings into yen in order to pay for reconstruction or, in the case of insurance companies, to pay benefits to people and businesses with damage policies. However, as most Japanese economists have pointed out since then, that alone wouldn’t have explained such a pronounced increase in such a short time.

According to the Mainichi Shimbun, the Great Hanshin Earthquake of 1995 created a precedent for the yen surge. Three months after that earthquake destroyed much of Kobe, the yen was the highest against the dollar that it had ever been in history up to that point. At the time, Japan’s GDP was still the envy of the world, and investors with extra cash decided to buy yen, believing that it was sounder than a lot of other investments, especially since Kobe would require lots of money to rebuild. They were basically chasing the repatriated yen. As always, Japan’s exporters panicked. The Bank of Japan intervened to bring the yen down, but they were unsuccessful. It wasn’t until the summer, when the United States and Europe joined in the intervention, that the yen started to drop.

Continue reading about the post-quake yen. →

Western Union charges into the money transfer breach

Friday, February 25th, 2011

A year ago, a new shikin kessai-ho (funds settlement law) went into effect with regard to foreign currency exchange, and as a result it is now legal for almost any financial institution to offer overseas money transfer services. Previously, in Japan only Japanese banks could offer this service, and anyone who has tried to wire money overseas through a bank will understand why a new law was needed. Besides charging sizable handling fees (tesuryo) for sending the money on top of an exchange fee, banks seem to take forever to make it happen.

Make that to go: Travelex window in Ueno Station

Western Union, the legendary telegraph company that provides international money transfer services in 240 countries, applied in Japan last July for permission to provide overseas remittances. The company presently commands an 8 percent share of the money transfer business in Asia, and its revenues have been decreasing every year since 2006, so Japan is seen as a vital opportunity. The service would specifically target foreign workers who regularly sent money back to their home countries, a market that will only grow as Japan inevitably allows more foreigners to work here and which Japanese banks have mostly ignored, at least until now.

Many foreign workers in the past used non-profit organizations whose intentions were above-board but which nevertheless operated in a legal gray area. Japanese banks tend to charge at least ¥4,000 to remit funds overseas, no matter how small, which is OK if you’re sending money once a year, but many foreign workers send money once a month. And since the bank is usually sending the funds to an unaffiliated financial institution, that institution charges the Japanese bank a fee, too, which the sender usually has to pay. With Western Union, it’s the same company on both ends of the transaction, so there’s only one fee.

WU has hooked up with the British currency exchange service Travelex, which already has outlets in six prefectures. Fees range from ¥990 for sums under ¥10,000 to ¥12,000 for remittances between ¥500,001 and ¥700,000, which is the maximum amount that WU Japan will transfer per transaction. (According to the Funds Settlement Law, you still need to use a bank to transfer funds of more than ¥1 million.) Better yet, the transfer is instantaneous, while it normally takes a bank several days to send your money. The Asahi Shimbun has already reported on how popular the service is among foreign workers and students in Japan.

Naturally, other companies are now entering the ring. Japan Travel Bureau and the SBI Group have started overseas remittance services that are actually slightly cheaper than WU’s: ¥880 for amounts of less than ¥30,000. Until the end of March, SBI even offers a special low fee of ¥1,980 for remittances over ¥250,000. Services other than Western Union’s, however, usually charge different fees depending on the country of destination. In addition, Rakuten Bank has also started a remittance service in January with Travelex, but only for businesses. Seven Bank, the ATM banking service connected to 7-11, has partnered with Western Union and this summer will begin offering money transfer services overseas through its system of 14,000 ATMs. SBI will offer a similar service through ATMs in Family Marts and branches of Japan Post’s Yucho Bank. Though they’ve been slow to acknowledge the new competition, Japanese banks are starting to stir. In November, Sumitomo Mitsui Bank started offering a 24-hour money transfer service over the Internet whose fees are ¥500 less than what they are if you make the transfer at a branch office. All transactions made through ATMs or over the Internet require pre-registration and documentation of email addresses and identification.

Telephone swindlers adapt; old folks don’t

Thursday, January 6th, 2011

It sounds so 2004, but the scourge of furikome sagi (bank transfer swindles), formerly known by the less sophisticated term “ore-ore sagi” (It’s me! It’s me! swindles), is still very much a problem even if the media no longer finds it interesting enough to cover. According to the National Police Agency, as of Nov. 10, there were 6,030 reported cases of telephone fraud nationwide for the year 2010 in which a total of ¥7.2 billion had been swindled. And despite the change in terminology and huge publicity campaign that brought attention to the problem, “ore-ore” cases, in which swindlers pretend to be children or grandchildren of the persons they call, pleading for money to solve a pending debt crisis or pay off someone for a slight, are still a popular form of con. However, a more common method in the last couple of years has been callers pretending to be police officers actually investigating swindling rackets. The fake officers tell the people they call that they may be the victim of a bank swindle and need their bank cards and passwords in order to make sure their accounts are safe. Then they drop by, dressed as bank officials, to collect the cards and information. Other con jobs involve the sale of previously unlisted stocks, “fees” for converting television systems from analog to digital, and government handouts (kyufukin), which somehow requires the recipient of the handout to first pay a large amount of money.

It's me!: Poster of swindling suspects in a post office

Even without all the intense publicity campaigns carried out by the NPA and individual banks to warn citizens about the dangers of furikome sagi, one would think that people would be naturally suspicious of anyone asking for such large amounts of money. But it seems people can still be quite gullible, especially elderly people. A recent Asahi Shimbun article related how a woman in her 70s went up to a teller in a Tokyo bank and asked to have ¥1.5 million from her account transferred to another account she had written down on a piece of paper. The teller, trained to intercept such suspicious transfers, asked the woman what it was for. The woman wouldn’t explained and became desperate, screaming at the teller to make the transfer, which the teller did. However, once the woman left the bank, the teller’s supervisor stopped the transfer and checked the receiving account, which he discovered had only been set up a few days before. He then called the woman and told her he thought the account was fake, but the woman still didn’t believe him. “Yesterday, my son called me and said he had guaranteed a loan for a friend who defaulted and had to pay it back immediately,” she explained. When the bank employee asked for her son’s telephone number, she refused. Fortunately, the son happened to drop by his mother’s house that day just as the swindler called asking why the money hadn’t been transferred yet.

This is what banks and the police have to contend with. In the case cited above, the police discovered that the swindling team had information about the woman’s family and were able to convince her that the caller was her son (with a cold, thus explaining the change in tone). However, in more and more cases, at least 40 percent in 2010, swindlers didn’t utilize telephones, opting instead for face-to-face encounters. Last year, police arrested 254 swindlers, 67 of whom were “ambushed” outside victims’ homes. Swindlers also try to avoid ATMs now, since many have security cameras and other devices that can pinpoint when a suspicious withdrawal takes place. In any case, criminals seem to be a lot more resourceful than old people.

Tourist spots averse to foreign exchange

Thursday, November 25th, 2010

Sign at Hakone souvenir shop

Discouraging words: Sign at Hakone souvenir shop

A friend in the tourist industry recently brought a group of middle aged and elderly Americans to Hakone National Park in Shizuoka Prefecture and the area around Mount Fuji. In Hakone, one of Japan’s most famous sightseeing spots, the Americans were discouraged from buying souvenirs when they got off the sightseeing boat at Lake Ashi because the large store at the dock does not take credit cards. This is not unusual for merchants outside of the major cities in Japan, but Hakone supposedly is enthusiastic about attracting foreign tourism. In fact, the policy seems downright stupid since the one souvenir shop in Hakone that does take credit cards is always packed.

My friend said that he always has the same problem in Hakone. Most of the restaurants there don’t take credit cards either. In addition, there are no foreign exchange services in Hakone except at some large hotels, which only guests can use. And the hotel in Fuji City where the American group stayed because it has a good view of Mount Fuji also does not exchange money. In fact, when our friend asked the front desk where people could exchange money in Fuji City the employee said he didn’t know.

We called the Hakone tourist association directly and asked about foreign exchange. The person who answered had to inquire of someone else and then told us that “some banks” in Hakone offer foreign exchange services but he didn’t know which ones. Also, banks in the area close at 3 p.m. on weekdays and are not open at all on weekends. We know that ATMs in post offices and 7-11 convenience stores will dispense yen for most foreign credit cards, but that means foreign tourists have to know this beforehand and then locate those businesses.

The truth is, Japan has never been very accommodating to tourists when it comes to foreign exchange, despite occasional campaigns like “Yokoso Japan” to boost foreign tourism. Of course, most tourists prefer to use credit cards these days, and you can use them easily enough in large Japanese cities, but once you leave metropolitan areas it gets a bit dodgy. Stand-alone foreign exchange services (ryogaejo) can be found at international airports and places like Tokyo Disneyland, but elsewhere they’re usually integrated into banks, which often make the exchange process a chore, requiring the copying of passports and other time-consuming procedures.

Let’s face it. Most Japanese businesses don’t trust anything but yen, in cash.

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