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J.P. Morgan Will Pull Out of Japan Alliance


J.P. Morgan Investment Management of New York is selling its 50 percent share of DKB Morgan, a mutual-fund joint venture with Dai-Ichi Kangyo Bank of Tokyo, according to Chris Cosentino, spokesperson for J.P. Morgan. The company declined to disclose the asking price for its share.

The withdrawal is due to the anticipated mergers of Dai-Ichi Kangyo Bank with the Industrial Bank of Japan and Fuji Bank, both of Tokyo, said Cosentino.

"We both revisited the partnership because [DKB] was involved in the merger," said Cosentino. "We had an exclusive thing going with [them] and their merger changes things." Another J.P. Morgan spokesperson said that J.P. Morgan's anticipated merger with Chase also played a role in the decision.

"In light of both mergers, both sides are really reassessing their investment trust strategies as a whole," said the spokesperson.

Kasei Ninomiya, head of DKB's Americas' office, also said that both mergers affected the break up.

"With both mergers, this mutual exclusive alliance has become not meaningful," he said. The two companies plan to continue in the future with a product by product alliance, according to Mr. Ninomiya.

"But, as it stands now, DKB can't have an alliance with anyone other than J.P Morgan in this area and vice versa and the mergers complicate that," he said.

The two firms started DKB Morgan in March 1999 to offer investment trusts to retail investors in Japan, according to a statement by DKB. The goal was to combine J.P Morgan's global fund management experience with DKB's Japanese customer base and distribution channels. The alliance's portfolio of eight funds has done well, gathering over $930 million under management, said Cosentino. Performance was not a reason for the break-up, he said.

The two firms will continue to do business together. J.P. Morgan will continue sub-advising funds for DKB and DKB will be offering J.P. Morgan's Global 50 Fund to its retail investors, according to Cosentino. DKB will cross sell it with the Industrial Bank of Japan and Fuji Bank, according to the other company spokeperson.