Sony Corp. applied Wednesday to Japan's Financial Services Agency for a preliminary license to open an Internet bank, which it will operate in collaboration with J.P. Morgan Chase & Co. and Sakura Bank Ltd. of Tokyo.
With its 4% stake in the venture, J.P. Morgan Chase is aiming to broaden its claims in the Japanese consumer market.
J.P. Morgan has been affiliated with the venture since at least last March. That is when the electronics and entertainment giant said, in its annual report, that it was preparing to get a banking license and viewed its Sony Finance International Inc. and other financial services subsidiaries collectively as "another main business pillar alongside such sectors as electronics and entertainment."
The Japanese Internet bank is scheduled to open in June with capital of $322 million. Sony will own 80%, and Sakura Bank, which will provide customers access to its network of automated teller machines, will have a 16% stake. J.P. Morgan Chase will contribute its "advice engine," a set of online personal finance applications.
The Sony bank will start with about 80 employees and seven directors, five from Sony and one each from Sakura and J.P. Morgan Chase. Shigeru Ishii, now the general manager of Sony Corp.'s financial service business development department, will become the president of Sony Bank. Hiro Takahashi, director of corporate communications for Sony Corp. of America, said Sony's entry into online banking fits with the company's shift from manufacturing to content-based businesses. Besides its consumer electronics business, Sony owns music labels and motion picture and television companies, and produces video game software for its PlayStation console.
"In the economy of the Internet era, Sony sees that by combining entertainment content and electronic hardware and technology, there will be new business opportunities," Mr. Takahashi said. Sony's plans for the bank have evolved over time, from an initial focus on Internet bill payments to a more fully developed financial services suite.
Eric Rajendra, a partner in the financial services practice at AT Kearney Inc., said the partnership gives J.P. Morgan Chase a chance to tap into a vast wealth management market in Japan, where personal savings exceed $11 trillion.
"It's been a very difficult market to crack for U.S. and European players in terms of wealth management," Mr. Rajendra said. "Although this is a minor stake, it will give J.P. Morgan Chase a kind of listening post on Japanese consumer behavior."
Before the J.P. Morgan-Chase merger in early January, both banks were striving to establish a major presence in Japan's troubled banking sector, Mr. Rajendra said. J.P. Morgan had a partnership with Daiichi Kangyo Bank, and Robert Fleming Holdings Ltd., which Chase purchased, had wealth management and investment banking operations in Japan.
Sony Bank will not have branches, and will offer yen-deposit accounts, investment trusts, bank payments, and other services. Within the first year of operations, it plans to develop foreign currency deposit accounts, a credit card business, and housing loans.
Sony hopes to attract 400,000 customer accounts and $5.2 billion after three years, and $8.6 billion of deposits after five years of operation. The company said there are no plans at this time to expand the bank's operations beyond Japan.
Sony has already established a presence in Japan's financial sector, with subsidiaries offering private-label credit cards, rentals and leasing of Sony products, and casualty and life insurance. In addition, Sony has invested in Monex Inc., an online securities trading company. David Katham, a stock analyst at Chicago firm Morningstar, said Sony Life Insurance Corporation Ltd., started in 1979, made up about 5% of the corporation's total revenue in the last quarter and grew 13% over the previous quarter.
Jeffrey L. Pittsburg, an analyst at Pittsburg Institutional, said the combination of online banking and financial services makes sense, particularly for a multinational company like Sony.
"It's a natural add-on for them," he said. "They do banking, they do insurance, certainly they could do international banking with it."
Mr. Pittsburg said J.P. Morgan Chase brings a broad spectrum of banking expertise to the venture, and gains new exposure in the Japanese market. "My bet is that they'll expand it all over Asia and eventually, who knows?" he said. "They might bring it back here."
