A vice-president of a major western bank in Tokyo compares the banking cultures of Japan and the west

• This monologue is part of a series in which people across the financial sector speak about their working lives

We are meeting in the centre of Tokyo on a Saturday in January. Casually dressed for the weekend, he is a slender man in his early 30s with a fashionable haircut. He orders pasta.

“When I travel to New York, I am always struck by the percentage of Caucasians in the banks there. Here in Tokyo it’s overwhelmingly Japanese. But in London you have the whole world population represented. I may go to a desk in a major bank and not find a single English person on the team. They may be from India, from Lebanon, from anywhere. That’s London.

“My job is in corporate banking. I am the liaison between my bank and one major global Japanese company. Let’s call that company XYZ. Now XYZ has operations around the globe. It buys materials and half-products from lots of countries. It assembles and manufactures in lots of countries. It sells its own products across the globe.

“Imagine the money flows: across currencies, across time zones, across jurisdictions. Say XYZ wants to buy a factory in China. For tax reasons XYZ may have its ‘paper headquarters’ in a tax-haven like London, Amsterdam or Switzerland. This means that the payment has to go through there. So it starts in yen in Japan, is converted into sterling or Swiss francs or euros to originate in the country of the paper headquarters. Then it must be converted into dollars because Chinese renminbi must be paid for in this way. So the payment alone moves through four currencies, but at what conversion rate? You have different currency markets operating in different time zones. The yen market closes before the London market opens. On what day should the transaction be credited? How does the transaction look to different regulatory systems in the countries concerned?

“You need to agree on a fee for all this, provide certification … In a transaction like this there may be at least three other banks involved. And don’t forget the need for ‘local information’. In some countries official regulation can be quite different from how things are done in practice. I need to be aware of that and pass on relevant information to XYZ.

“This is just one example and you understand how global financial transactions get very complicated very quickly. And how a bank with global operations is at a huge advantage. When Japanese corporations expand overseas they cannot do so using Japanese banks as these lack such global networks. This is not good for Japan and we must work harder to change it. Japanese corporations could do more, too. I know of Japanese executives who take an English course but quit very soon; they decide they are just going to take an interpreter to wherever they are going.

“My day starts before 7am when I wake up and check my BlackBerry. It doesn’t really matter where I am to do work. My office phone is routed to my BlackBerry so it looks as if I am speaking from the office. On the commute I read stuff and work from the BlackBerry. I need to know what has happened while I was asleep, both in the world and with XYZ. Say there has been a flood in Thailand. Has that affected operations for the local XYZ activities?

“On a normal morning there are between 50 and 100 emails to go through. I usually get into the office around 9am and work till midnight, till just before the last train. Working hours often shift. When the XYZ office with which I am doing business is in a completely different time zone, you need to adapt your hours.

“For example, European banks are currently withdrawing from Latin America, because the crisis forces them to retrench. So I may get a call from the XYZ office in Brazil that they can no longer get a credit-line from their European bank. Can we support them? I get on the phone with the XYZ office in Brazil and in Tokyo, and with our local office in Brazil as well as with the people in our bank here in Tokyo who are responsible for Latin America.

“What it comes down to is client maintenance. Any request from XYZ headquarters here in Tokyo or a local subsidiary goes to me. I speak to my counterparts every day about activities, needs, demands, strategy … Co-ordination is key.

“There are interesting parallels between Japan and the UK. Both are islands with a limited and stable population. They have their own currency and they are a former power with lots of history. Their banks and corporations now make most of their profits overseas, which they repatriate for tax reasons.

“London is still the financial centre for the Europe and Mediterranean region. It helps how countries like India and other former British colonies have adopted many of the British laws, rules and regulations. That is of great benefit to London.

“Yet it’s unclear where London is going, what the regulatory climate is going to be. Also, I don’t see much innovation coming out of the UK these days. The bankers’ population may be very diverse. The products they come up with are rather old-fashioned.”

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Bank aims to tempts new customers by offering preferential rates to those switching Isa providers

NatWest has taken an early lead in the annual battle for Isa savers’ money by offering the highest fixed interest rates for people who transfer money from other providers.

The bank will pay “preferential” rates to those switching Isa providers – 3.35% if they lock in for one year, 3.9% for two years and 4.2% for three years. The minimum transfer is £1,000 and applications must be received by the bank by 29 February.

For those not necessarily wanting to transfer money, Leeds building society and Metro Bank both pay 3.25% on their one-year fixed-rate Isas, while the Halifax and the Post Office are paying 3.7% respectively on their two- and three-year fixed rate Isas.

Virgin Money’s Easy Access Cash e-Isa offers the best transfer rate of 2.85% for people wanting easy access to their money, according to Anna Bowes, co-founder of website SavingsChampion. “Although there are accounts offering instant access with higher rates than this, they do not allow transfers,” she says.

Children who do not have a child trust fund are now also able to take out their own cash Isas, up to £3,600 each tax year. Nationwide and Skipton building societies both pay 3% on deposits of £1 upwards. The Skipton account can be operated through the post and branches, while the Nationwide account is branch-only.

Those aged 16 and 17 benefit from two Isa allowances – their junior allowance worth £3,600 plus the adult cash allowance of £5,340 for the 2011/12 tax year, rising to £5,640 in 2012/13.

Paul Kennedy, head of tax planning for FundsNetwork, says: “Families should make the most of the ability of children aged 16 and 17 to have both a Junior Isa and an adult cash Isa. Both the Junior Isa allowance and the adult cash Isa allowance are ‘use it or lose it’ annual allowances and if not used by the end of the tax year are lost forever.”

If parents put substantial sums of money in their children’s ordinary savings accounts, any interest earned over £100 is subject to tax at the parents’ marginal rate. But in the case of junior and adult cash Isas, all returns will be tax free.

Hidden charges make it difficult for investors to compare funds. Now Fidelity is calling for a simple charging structure so the true cost is clear to all

Fidelity Worldwide Investment is calling on investment fund companies to adopt an industry standard breakdown of costs to help end hidden charges that can damage investors’ returns. The firm said inconsistent price comparisons did not help investors, and urged the industry to develop a universal approach to disclosing the total cost of investing in a fund.

Investors typically use the annual Total Expense Ratio (TER) to compare the cost of investment funds. This may include published fees such as a company’s standard annual management charge as well as various administration fees. But, deceptively, the TER excludes dealing commission, stamp duty and other portfolio turnover costs that can add considerably to investors’ annual charges, depending on how often a fund manager buys and sells shares within the portfolio. Investors only find out they are paying more in fees than they would have thought at the end of the year through their annual statement.

The average yearly TER on a £10,000 investment across all UK retail funds is 1.65% – £13.75 a month or £165 a year. But Fidelity said this rises to 2% when portfolio turnover costs are included – that’s £16.67 a month or £200 a year. For wealthier investors, a small percentage difference in fees can seriously add up.

Fidelity’s research mirrors an investigation by consumer rights group Which? in October 2011, which found that £258m of portfolio turnover costs was being hidden from consumers each year. It said a high level of portfolio trading can sometimes double the annual costs of holding investment funds.

Gary Shaughnessy, UK managing director at Fidelity, says: “We believe the charging structure on funds should be simple, easy to understand and not discriminate against smaller investors.

“We are seeing selective pricing start to emerge, which runs the risk of misleading investors about the real costs they are paying. Some companies are only presenting part of the picture and, crucially, they are failing to show the cost of advice or the cost of the platform without which investors would not be able to access the fund.

“There are a lot of headline figures being bandied about but they do little to help investors understand the true cost of investing, or to evaluate whether these costs are fair for the service they are receiving. What will really help is a transparent and standardised cost breakdown in pounds and pence.”

Alan and Gina Miller, co-founders of exchange traded fund specialist SCM Private, have been critical about the information available on charges, and have launched www.trueandfaircampaign.com calling for greater transparency over charges and how managers invest clients’ cash.

SCM’s research indicates that only 19% of savers and investors know how much they are charged; while hidden costs across the entire UK savings and investment industry run at £18.5bn.

Alan Miller, who was chief investment officer at New Star Asset Management until 2007, says: “British consumers have, over many years, been comprehensively misled by the investment management industry in relation to transparency of charges and investments.

“Key issues are the multiplicity of hidden fees, lack of product transparency and the convoluted language which the investment management industry uses. The odds are stacked against consumers being able to make informed and competitive investment decisions.”

The asset management industry’s trade body, the Investment Management Association, argues that trading costs are readily available in fund literature, while investment fund regulation also requires their disclosure. Richard Saunders, chief executive of the IMA, says: “People need to save for the long term. They do not need to be scared off by false stories that they will be ripped off by the industry.”

For actively managed funds in the UK All Companies sector, the IMA said trading costs totalled 0.31% of funds’ average assets in 2009 (the latest figures available from the IMA). For tracker funds, transaction costs totalled 0.06%.

Saunders adds: “The IMA’s figures demonstrate clearly that so-called hidden charges which cost investors billions a year are a complete myth. If the accusation were true, it would show up in the net returns achieved by investors. But there is no sign of it. The accusations of hidden charges do not stand up.”

Gina Miller said SCM’s proposed code would provide 100% transparency by showing the whole range of fees, to be called the Total Cost of Investment (TCI). She also highlighted the call for improved transparency. “If managers were required to publish a full list of holdings once a quarter, investors would be able to see if the manager had done something odd or if a fund was straying too far from its stated approach.”

Patrick Connolly of IFA AWD Chase de Vere says: “It is a balancing act. While investors may want more transparency so they can see a full breakdown of fund holdings, the danger for a manager is that their best ideas are simply picked up and copied by others who don’t invest in the fund.”

He added that the investment industry often fails to make fund management charges clear and transparent: “Many investors believe that the total charges they pay on an investment fund are the initial charge and the annual management charge. However, the reality is that the TER can be much greater than the annual management charge.”