ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Finance

Japan megabanks look for new sources of foreign-currency funds

TOKYO -- Japan's three megabanks are raising more funds in currencies other than yen and dollars as they seek opportunities in overseas lending, such as by providing credit to blue-chip companies overseas and offering syndicated loans for resource development projects.

     The move comes as big Japanese banks continue to struggle with sluggish domestic earnings, due to rock-bottom interest rates. These banks generally fund their domestic operations with deposits from individuals. But they procure foreign exchange primarily from large-lot customers, such as big companies. Diversifying the sources of their funding is thus a challenge.

     But while the balance of foreign-currency loans at Japanese banks totals 59 trillion yen ($501 billion), foreign-currency bank deposits stand at 39 trillion yen, prompting them to look for stable sources of foreign exchange. In Japan, by contrast, the banks have surplus funds.

     In Singapore, Mizuho Financial Group issued 5-year bonds valued at 100 million Singapore dollars ($77.1 million). This was the first time a Japanese bank had issued Singapore dollar-denominated bonds in Singapore. Mizuho's Singapore dollar-denominated loans stand at roughly 400 billion yen, and it has almost an equal amount of Singapore dollar deposits.

    While loans take about three years to be repaid, on average, depositors typically keep their savings in the bank for about six months. Because depositors can pull their money out quickly during periods of market turmoil, banks need longer-term sources of funding to match the period of their loans.

     Sumitomo Mitsui Financial Group in September issued 100 million Australian dollars ($88.1 million) of bonds aimed at foreign investors.

     Mitsubishi UFJ Financial Group, for one, is responding in Latin America by teaming up with local banks to obtain foreign currency. Since the summer, it has been working with with Banco Nacional de Comercio Exterior, S.N.C. of Mexico and the Brazilian Development Bank to procure long-term funds denominated in the Mexican peso and the Brazilian real. It will create a framework for the local banks to provide loans to Japanese companies operating in the two countries through Mitsubishi UFJ.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more