Merrill Lynch to shut 20 Japan branches

The US brokerage giant Merrill Lynch has said it is to cut 20 of its retail outlets in Japan.

The 28 branches it currently operates will be consolidated into eight, and the workforce will be chopped from 1,700 to just 500.

The company said the restructuring should help the operation break even during the coming financial year.

Merrill Lynch entered the Japanese retail market in 1998 when it bought the failed Yamaichi Securities, but the operation has yet to make money.

Despite the downsizing of its interests, Merrill Lynch said it remained committed to maintaining a presence in Japan.

"We have been in Japan for 40 years and consider the Japanese market a vital element of our global business," said Hisashi Moriya, chairman of Merrill Lynch Japan Securities in a statement.

"You don't require as many branches these days due to changes in technology. People can log on to the internet, use email...We are getting a lot less clients walking into a branch than we thought we would from just three years ago when we started the operation," the Merrill Lynch spokesman in Tokyo told the BBC's World Business Report.

"We remain committed to it, we will be here for the long term," he added.

Cutting back

Merrill, along with many other investment banks, has been making a number of cost cutting measures to counter a downturn in business.

The slump in global share prices over the past year has hit profits as investors shy away from equities, and the economic slowdown has led to corporate activity - such as mergers and takeovers - drying up.

Last year Merrill offered all of its 65,000 staff the chance to take voluntary redundancy, and it has also sold off operations including Canadian and South African asset management businesses.

Japan has been seen as a potentially lucrative market for retail brokers, but now that the country is back in recession consumers are expected to keep their savings safe bank accounts - despite the minimal interest rates.