|JAPAN BANKS COURT OVERSEAS BORROWERS|
Aruba, April 26, 2013 — Japan’s banking titans are hiring Spanish-speaking bankers to win new business in Latin America and handing out loans to junk-grade borrowers in the United States as they flee meager returns at home.
Lenders like Sumitomo Mitsui Financial Group, or SMFG, have increased overseas lending since the euro zone debt crisis sent European rivals packing. The move abroad was given new impetus this month after the central bank unveiled a stimulus plan that has further eroded razor-thin loan margins and cut returns on Japanese government bonds.
Banks including Mizuho Financial Group are pushing ahead to identify new overseas borrowers, including corporations with little connection to Japan and developers of natural resources seeking copious funding. Their ventures abroad, while still modest in comparison with their domestic operations, point to their growing risk tolerance in emerging markets, and it remains to be seen whether their efforts will pay off.
“We now arrange deals that are very different from what we used to do in the past — that is, those with very strong local flavor with no involvement of Japanese companies,” said Takayuki Sakai, chief manager of project finance at Bank of Tokyo-Mitsubishi UFJ, a core unit of Mitsubishi UFJ Financial Group. The bank is looking to increase lending denominated in local currencies, instead of the usual dollar-dominated loans, he said.
Bank of Tokyo-Mitsubishi UFJ has been beefing up its project finance business in Latin America, hiring specialist bankers who speak Spanish and Portuguese to gain better access to projects involving exclusively local parties. Last summer, the bank hired Ralph Scholtz, BNP Paribas’s Latin America project finance managing director, as its region’s project finance team head. It also hired a Portuguese-speaking banker from HSBC Holdings.
The bank said Latin America is a promising market for project financing, highlighting plans in Mexico to build gas pipelines, and development of copper mines and auxiliary facilities like power plants in Chile. Mitsubishi UFJ Financial Group does not disclose data on dollar-based overseas loans. The outstanding overseas loans of two domestic rivals, SMFG and Mizuho, totaled $277 billion as of December, an increase of 66 percent from March 2010.
Sumitomo Mitsui Banking, a unit of SMFG, said a team of its U.S. bankers was taking aim at small and medium-size local businesses, including those with credit ratings of BB or lower.