NEW YORK -- The Federal Reserve Board has approved an application by Sumitomo Bank Ltd. to enter the U.S. securities markets.
The new unit, Sumitomo Bank Securities Inc., would have start-up capital of $40 million and was expected to begin operations shortly. It is to trade commercial paper, underwrite and deal in U.S. Treasury and agency bonds, and handle private placements.
The bank named Norah O. Hughes president of the new unit on Monday.
Swiss Bank Veteran
Ms. Hughes, a former vice president at Swiss Bank, headed up the Swiss bank's primary dealership in U.S. Treasury securities.
Sumitomo is the latest on a growing list of foreign banks to set up securities trading and underwriting units in the expectation that U.S. rules barring banks from entering the securities business will soon be eased.
Among other foreign banks that have set up securities units are Holland's ABN-Amro, Barclays Bank PLC, Canadian Imperial Bank of Commerce, and Royal Bank of Canada.
Abortive Goldman Venture
In 1985, Sumitomo sought to enter the U.S. securities business by acquiring a 12.5% stake in Goldman, Sachs & Co. for $500 million. The Japanese company, however, was barred by U.S. regulators from doing any underwriting or trading.
Sumitomo subsequently separated its U.S. commercial banking and retail banking businesses from nonbanking operations and put the latter under a separate holding company, Sumitomo Bank Financial Services.
The new holding company controls a capital markets unit, trust company, and leasing and finance subsidiary.