Japanese banks’ success in taking on Wall Street to offer loans in the United States is drawing regulatory attention as the cost of dollar funding rises.
Faced with ultralow interest rates and tepid loan demand at home, banks in Japan have been ramping up corporate lending and bond underwriting overseas. The biggest, Mitsubishi UFJ Financial Group, is on track to overtake Goldman Sachs Group to rank in the top five for U.S. loans this year.
Rapid rate hikes by the Federal Reserve are now making dollar funding a critical issue for the lenders, putting them at a disadvantage to U.S. rivals, a senior official at Japan’s financial regulator said.