In Focus
LENDING & CREDIT | Cesar Tordesillas, Japan

Japanese banks see growth in lending to Korean conglomerates

Japanese banks are targeting South Korean conglomerates seeking funds for global expansion.

Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group have formed teams to track the funding needs of South Korean firms looking to build chip factories and auto assembly lines abroad.

Among these companies are POSCO, Samsung Electronics and Hyundai Motor.

"We have been studying their business and capital expenditure plans and chasing potential deals," said Takahiko Yasuhara, the Seoul branch general manager at Mizuho Corporate Bank. "As European lenders face hard times, the status of Japanese banks is on the rise."

In the year ended March 31, loans by Japan's top three banks in South Korea grew 28 percent to about 1.07trillion yen or $13.3 billion. The banks said the figure would have been several times larger if lending to overseas subsidiaries of South Korean companies were included.

By contrast, their outstanding loans in Japan remained flat.

SMBC set up a "Global Korea" corporate banking department in April last year with about 20 staff, including South Korean bankers based in New York, London and Singapore. Bank of Tokyo-Mitsubishi UFJ launched a similar team in May with 20 bankers.

The banks are also trying to move beyond lending. Mizuho said foreign exchange deals with South Korean clients jumped more than twofold in the financial year ended March 31.

"We expect loan demand by South Korean companies to grow further, though we already reached considerableamounts," said Kazuki Kato, a senior banker at international banking unit at Sumitomo Mitsui Banking Corp." Our next step is to expand into trade finance and cash management."

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