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Finance

Liquidity tsunami pushes megabanks into project financing abroad

TOKYO -- Japan's three largest banking groups are boosting their exposure to overseas infrastructure and resources projects in an effort to bolster profits amid a ultralow interest rate environment at home.

     The three megabanks organized a record $31.3 billion in financing for such projects as lead managers this year. The amount translates to a 19% increase from a year earlier.

     The amount of project financing loans extended worldwide between the beginning of the year and Dec. 22 reached $221.7 billion, 8% higher than a year earlier, according to Thomson Reuters.

     Such projects in the Asia-Pacific region and Europe fell off from last year, but growth of 45% was recorded in the Americas, due partly to the booming shale oil industry.

     Mitsubishi UFJ Financial Group led the world in project financing for the second year running in terms of the amount of loans organized as a lead manager through Dec. 22. At $12.05 billion, the amount was 7.4% higher than the previous year.

     Sumitomo Mitsui Financial Group rose from fourth in 2013 to second, as the amount soared 43.1% to $11.31 billion. Mizuho Financial Group moved up from fifth to fourth, thanks to an 11% rise to $7.98 billion.

     France's BNP Paribas surged from 16th last year to third on a 2.9-fold increase to $8.14 billion.

Japanese connection

The three Japanese megabanks accounted for a record 14.1% of worldwide project financing this year, up 1.3 percentage points from a year earlier. The main reason for the record figure is an increase in the number of large-scale infrastructure and natural resource projects in which Japanese companies play major roles.

     All three took part in the $7.8 billion syndicated loan for the Cameron liquefied natural gas export project in the U.S., in which Japanese trading houses Mitsui & Co. and Mitsubishi Corp. hold stakes. The three were also among the lenders who provided $7.2 billion for the Roy Hill iron ore mine project in Australia, which involves Marubeni, another Japanese trading house. The Intercity Express Program in the U.K., the contract for which was awarded to Hitachi, was another project that all three managed to hitch on to. The project financing for this endeavor reached $3.7 billion.

     Individually, MUFG provided a loan for an oil refinery project in Turkey involving Itochu, yet another Japanese trading house. Mizuho extended a loan for an Indonesian hydroelectric project involving Kansai Electric Power and others. SMFG handled a loan rollover for the Marina Bay Sands casino resort complex in Singapore.

(Nikkei)

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