Three megabanks strengthening business in emerging economies

JIJI

Three megabanks —Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp. — are strengthening their operations in emerging economies.

Behind the move is rapidly growing loans to overseas clients due to an increase in the number of large projects associated with infrastructure facility exports promoted by the Japanese government.

The three banks plan to increase their bases in line with active business expansions abroad by Japanese companies. They are aggressively promoting operations abroad amid slumping fund demand at home.

Mizuho Corporate Bank last November extended syndicated loans worth some $1.2 billion for the thermal power generation business by a Thai company, jointly with the Japan Bank for International Cooperation and local financial institutions. The Thai firm is affiliated with Electric Power Development Co.

In cooperation with JBIC, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui, the wholesale banking unit of Mizuho Financial Group Inc. decided in March to provide some $1 billion in loans for a copper mine project, which involves Sumitomo Metal Mining Co.

The three megabanks’ overseas outstanding loans in the April-September first half of fiscal 2011 totaled $4.36 trillion, according to the Bank of Japan. The figure grew by more than $100 billion from the end of March 2010.

In particular, loans for companies in other parts of Asia ballooned 1.5-fold to $122.5 billion.

The proportion of their overseas loans rose to 17 percent of their total outstanding loans.

Their loans abroad seem to have increased in the second half of fiscal 2011 as well.

A senior Mizuho Corporate Bank official said it is hoping to build relations with not only Japanese companies but also promising non-Japanese firms.

Among their rapid moves to increase footholds abroad, Mizuho Corporate Bank opened representative offices in Turkey and Myanmar this year. It plans to increase the number of its bases elsewhere in Asia to 10 over the next five years.

Bank of Tokyo-Mitsubishi UFJ, a core banking unit of Mitsubishi UFJ Financial Group Inc., reopened an office for the first time in 45 years in Cambodia.