Bank of America Expands Japan Equities, Hires Staff

May 26 (Bloomberg) -- Bank of America Corp., the largest U.S. bank, said it is hiring staff from global rivals including Citigroup Inc. and Goldman Sachs Group Inc. to expand its equity sales business in Japan.

Akira Ushida joined the company’s Merrill Lynch & Co. unit today from Citigroup, while Douglas Butcher, a former Morgan Stanley employee, started as a managing director last week, according to an internal memo obtained by Bloomberg News. Hiroyuki Kurosu from UBS AG joined in March and Chiho Adachi from Goldman in April, the memo said.

Merrill is shifting to commission-based business from proprietary trading to reduce investment risk and secure stable sources of income. The change, backed by Bank of America’s global markets head, Thomas Montag, comes as banks including HSBC Holdings Plc reduce equity-related operations in Japan.

“This down environment is the time to invest and build market share,” Patrick Hogan, Merrill Lynch Japan Securities Co.’s global institutional sales chief, said in an interview yesterday, confirming the appointments. “We are renewing our focus on Japanese domestic financial firms, whose assets have been much more stable versus their foreign counterparts.”

Merrill will target Japanese asset management companies, life insurers and banks to increase trading volume, as well as clients from Sydney to Singapore, said Hogan, 40.

Trend Reverse

HSBC, Europe’s biggest bank, is shutting down its stock- research and trading businesses in Japan. About 40 people from the equity business will lose their jobs, two people familiar with the dismissals said on April 24.

Bank of America’s expansion in Japan is “a reversal of the trend, and a unique move,” said Katsunobu Komizo, the chief executive of Executive Search Partners Co., a Tokyo-based financial consulting firm. “Japanese banks and insurers are still pessimistic on Japan stocks as of today.”

Global investor confidence in Japanese stocks improved in May from April, according to a Bank of America survey of 220 fund mangers, who oversee $617 billion in the U.S., Europe and Asia, including Japan.

Net underweighting of Japanese shares -- or money managers whose holdings of the nation’s stocks are below benchmarks -- improved to -31 percent in May from -36 percent in April, the survey showed. Investors wishing to be most underweight Japanese shares shrank to -7 percent from -18 percent, the survey found.

“The worst is probably over,” Hogan said. “In six months and 12 months the economy and market will be better.”