Japanese lender to follow corporate clients into Asia
(9 July 2019 – Asia) One of Japan’s biggest regional banks, Concordia Financial Group, plans to expand in Asia, 20 years after the country’s financial crisis forced it to retreat to its home market.
Concordia plans to offer cash management services to its Japanese corporate clients and infrastructure loans to local entities across Asia, said its president Kenichi Kawamura.
According to Bloomberg the bank aims to hire specialists and double overseas loans to more than 400 billion yen in three years.
The lender, which operates in Tokyo and Yokohama, is following a path taken by Japan's largest banks to make up for negative interest rates and weak loan demand at home. It is one of the few regional banks that have the luxury; most are too small and rural, leaving them exposed to their decaying local economies.
"It's hard to secure returns from banking business in Japan alone, given its low growth and mature society," said Mr Kawamura, adding that the bank can obtain much higher returns "if we can use our capital and funds in growing regions".
The country's second-biggest regional bank by assets aims to set up a branch in Singapore as a transaction banking hub for Japanese corporate clients operating in South-east Asia, he added.
Many of the bank's customers, such as auto-parts makers, operate in the region and need help with trade finance and managing their cash flows more efficiently, he said.
About 1,500 of Concordia's corporate clients do business in South-east Asia and India.
The push into overseas transaction banking should give the lender better access to foreign currency deposits, in turn, providing funding for its lending plans, he said.
The bank sees opportunities to provide loans to borrowers in Asia for projects such as railroads and power plants, he added.
Concordia was formed in 2016 as the parent company of Bank of Yokohama and Higashi-Nippon Bank. Like many Japanese financial firms, Bank of Yokohama aggressively expanded abroad during the nation's bubble era in the 1980s, setting up shop in places like London, New York and Brussels before retreating in the late 1990s. It opened a Shanghai branch in 2009.