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Resona sees 25% loan jump for expansion into Asia

Bloomberg

Resona Holdings Inc. plans to boost loans to domestic businesses looking to expand in Asia by 25 percent within a year, according to incoming President Kazuhiro Higashi.

Higashi, who assumes the post April 1, said he is targeting ¥50 billion in new loans to Japanese companies with operations in countries including China, Thailand and Indonesia by the end of next March. By market value, such loans by Japan’s fifth-largest bank total ¥40 billion in the current fiscal year, which ends March 31.

“We’re seeing growing interest in Asia expansion among our clients,” Higashi, 55, currently deputy president, said in a recent interview. “We’ve had more than 700 consultations on the subject over the last six months — that’s been quite a surprise.”

Resona, which depends entirely on the domestic market, follows bigger rivals including Mitsubishi UFJ Financial Group Inc. in tapping credit demand from faster-growing economies as deflation and a shrinking population limit growth at home. The bank is also seeking a tieup with a Malaysian lender similar to an alliance struck last year with the Philippines’ Rizal Commercial Banking Corp., Higashi said.

With no banking licenses outside the country, Tokyo-based Resona has relied on partners such as State Bank of India to boost loans to domestic companies with offshore operations.

Resona is among lenders that were rescued by taxpayers after collapsing under bad loans in the wake of the property and stock-market bubble in the 1990s. The government has injected ¥3.1 trillion into the bank since 1999. The bank still owes ¥872 billion from the state bailout — ¥610 billion worth of preferred shares and ¥262 billion in common stock.

In the wake of Sumitomo Mitsui Trust Holdings Inc.’s announcement earlier this month about its bailout repayment, Higashi said there is no change to Resona’s payback plan issued in November 2010. About ¥450 billion in preferred stock remains to be bought back by March 2016 under the existing plan, he said.

“We don’t intend to take any action because of the rally in Resona’s shares,” Higashi said, after Sumitomo Mitsui Trust bought back ¥200 billion of its own shares from the government.