5. Enhancing our asset management business

In July 2016, SMBC acquired an additional 20% of the outstanding shares of Sumitomo Mitsui Asset Management Company (SMAM) from Sumitomo Life Insurance, Mitsui Sumitomo Insurance Company and Mitsui Life Insurance Company (presently Taiju Life Insurance Company), and made it a consolidated subsidiary. Although SMBC, SMBC Nikko Securities and SMBC Friend Securities, had marketed investment trust products of SMAM, by raising the shareholding ratio SMBC aimed to dramatically improve SMAM’s capabilities, making SMAM an asset management company that is readily chosen by product sales companies, especially outside the Group. SMFG acquired all the shares of SMAM held by SMBC in October 2016, and SMAM became a directly owned subsidiary of SMFG with 60% of ownership.

While the asset management business generally benefits from the scale of markets, the market shares of SMAM and Daiwa SB Investment (DSBI) were both relatively small. In May 2018, Daiwa Securities Group, Mitsui Sumitomo Insurance Company, Sumitomo Life Insurance, and SMFG concluded a memorandum of understanding (MOU) on the merger of SMAM and DSBI. Based on this MOU, the merger plan was executed to form Sumitomo Mitsui DS Asset Management Company, Limited in April 2019.