Bank of Montreal Expands Japan Brokerage With Ex-Barclays Hires

Bank of Montreal (BMO) has hired senior bankers from Barclays Plc to expand its brokerage business in Tokyo according to Bloomberg. Ryuta Higuchi and Makoto Ohkawara joined the Toronto-based bank's Japanese securities subsidiary as directors this year. Higuchi handles sales of fixed income securities to institutional investors in currencies other than the yen, while Ohkawara is responsible for establishing a foreign exchange and derivatives distribution team in Japan.

BMO joins a number of foreign lenders expanding in Japan as market transactions grow and the volume of mergers hits record highs. Citigroup Inc. plans to increase its investment-banking team by almost a third, while Goldman Sachs Group Inc. and UBS Group AG have also made key hires according to Bloomberg.

The Canadian firm is betting that Japanese investors will continue to seek additional returns overseas even as the Bank of Japan's interest-rate hikes add to the allure of domestic debt. As Japanese money gradually shifts from deposits to investments, demand for bonds denominated both in yen and foreign currencies should rise.

Why the Move Happened

BMO, which obtained a brokerage license in 2022 from Japan's financial regulator, has stepped up hiring in Tokyo last year as part of its international expansion. BMO Japan Securities Ltd., the local unit, recruited former Barclays managing director Tomohiro Mikajiri in July as Japan global markets head.

The firm sees demand in Japan for structured securities backed by pools of mortgages. It ranked No. 1 last year and in 2024 for US agency collateralized mortgage obligations.

How Markets Responded

BMO has been seeking to grow its global markets business in Asia as clients look for access to North American products. In Japan, it aims to build a full-coverage platform for institutional investors.

Japan's 40-year government bond yields have fallen for a fourth consecutive trading session, driven by strong buying interest from foreign investors. This trend reflects renewed global appetite for duration at a time when interest rate trajectories across major economies are being reassessed.

What Analysts Are Watching

BMO's expansion in Japan is part of a broader trend of foreign lenders entering the market. The firm's strategy is to capitalize on Japanese investors' demand for overseas securities despite the Bank of Japan's interest-rate hikes. Analysts are watching how this demand evolves as Japanese money continues to shift from deposits to investments.

The firm's expansion in Japan also reflects its strategic focus on growing its global markets business in Asia. BMO's hiring of former Barclays bankers is a clear indication of its commitment to building a strong presence in the Japanese market.