The Japanese financial group has taken a majority stake in a unit of a Philippines banking group, suggestive of the former's confidence in continued growth in that country.

Nomura and Philippines-based lender BDO Unibank have signed a definitive agreement under which the Japanese banking group will invest in PCIB Securities, a wholly-owned subsidiary of BDO, in a move suggestive of how firms are increasingly targeting the Philippines.

The agreement is subject to local regulatory control and closing conditions.

Under the terms of the agreement, BDO will hold a 51 per cent stake in PCIB, with the remaining 49 per cent being held by Nomura. The new company will become an equity-method affiliate of Nomura, a statement from the Japanese bank said.

“The Philippines is one of the fastest growing markets for the retail brokerage business in Asia, and the new company will initially focus on providing online trading services for local stocks to individual investors in the Philippines. Going forward, the new company will also provide services to a broad range of investors looking at cross-border investment opportunities,” Nomura said. 

Despite some wobbles, the economy of the Philippines has grown relatively rapidly in recent years. The MSCI Philippines Index of equities shows total returns of 5.44 per cent since the start of this year (in dollars), contrasting with an 11.8 per cent return for the Indonesia stock market, for example (source: MSCI). Over five years on an annualised basis, returns are almost 19 per cent.

Nomura said it wants to “enhance” its presence in the Philippines as well as increase the linkages between its retail and wholesale businesses in Asia outside Japan.

The Japanese firm said it did not expect the investment to have a material impact on consolidated results.