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Japanese banks helping firms expand abroad
Publication Date : 03-09-2012
Major Japanese banks are stepping up their efforts to support small and midsize companies expand their activities in Asia as an increasing number of them seek new opportunities in the expanding markets there and shift their operations abroad to cope with the strong yen.
In addition to providing loans to the companies, the banks also are providing other types of support, such as information on local areas and introducing human resources.
In May, Bank of Tokyo-Mitsubishi UFJ's international business department established a development section at the bank's Singapore branch.
The bank, which has the most overseas offices among Japanese banks, focuses directly on supporting small and midsize companies in countries they are seeking to advance in. It offers various types of information to its customers, such as that on complicated customs-related procedures and on mergers and acquisitions, with an eye toward increasing the volume of its loans to such clients.
Mizuho Bank has started a foreign-currency-denominated financing system funded with US$1 billion (about 79 billion yen) for second-tier companies as well as small and midsize firms. Sumitomo Mitsui Banking Corp. and Resona Bank plan to start similar services soon.
Sumitomo Mitsui provided support to 5,700 clients in fiscal 2011 through its global advisory department, which is in charge of helping companies advance overseas--1,100 more than the previous fiscal year. About 80 per cent are second-tier companies and small and midsize firms, with more than half of them planning to advance to China. The number of companies planning to advance in Indonesia has doubled, the bank said.
The amount of outstanding overseas loans provided by three megabank groups--Mizuho Financial Group, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group--was about 39 trillion yen for the April-to-June quarter this year in consolidated accounts, while domestic loans remained sluggish.
For megabanks, it has become indispensable for securing profits to respond to the demands of the small and midsize companies seeking to advance into overseas markets.
The banks earlier planned to aggressively utilize the Bank of Japan's dollar-denominated loans to support small and midsize companies with expanding their activities abroad. The system was originally scheduled to start in September. The maximum amount the BOJ was to lend each bank was set at $1 billion, though the banks expected demand by companies to exceed this figure.
However, the launch of the BOJ's dollar-denominated loan programme has been delayed. As the BOJ used the London Interbank Offered Rate (LIBOR) for the loans, the recent LIBOR rate-rigging scandal affected the programme's introduction.
The delay likely will affect the banks' efforts to provide support to small and midsize firms that plan to develop their overseas operations.