Raw Japan

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SMFG banking on Asia?

By David Dolan
January 6, 2010

The bulk of Sumitomo Mitsui Financial Group’s  up to $9.7 billion share issue will go to meet stricter capital requirements, but sources say the bank will use some money to hunt for more opportunities in Asia.

Asian expansion is increasingly important for Japanese lenders, saddled with low profit margins and few opportunities for growth at home. Sumitomo Mitsui already has stakes in Vietnam’s Eximbank, South Korea’s KB Financial and Hong Kong’s Bank of East Asia, and wants to benefit more from the region’s growing economies.

Less than 15 percent of Sumitomo Mitsui’s gross profit comes from overseas now, but it wants to raise that to as much as 30 percent in the next few years by focusing on Asia.

SMFG-GOLDMAN/It’s a tall order. Unlike some major European commercial banks, such as HSBC and Standard Chartered, Japanese lenders don’t have a strong track record abroad, as the vast majority of their overseas operations are focused on servicing Japanese corporates.

In an interview this week with Reuters Television, SMFG President Teisuke Kitayama spoke about the bank’s desire for Asian expansion as well as capital raising and the future of troubled carrier Japan Airlines.

Photo credit: REUTERS/Toru Hanai

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