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Japan finance: Asia remains key for SMBC chief
TOKYO — The head of Japan’s Sumitomo Mitsui Banking Corp. is looking to stay ahead in the banking business, which is seeing sudden structural changes.
Takeshi Kunibe, president of SMBC, a core unit of Sumitomo Mitsui Financial Group, said in a recent interview with The Nikkei that the banking business is at a major turning point. He expects tougher regulations and the entrance of nonfinancial institutions to change the industry.
SMBC mapped out strategies focused on Asia in its three-year midterm business plan compiled in spring 2014. “The strategies of making Asia, which will definitely grow in the medium- to long-term, our home market will remain unchanged,” he said. The executive also explained that the bank is being vigilant about risks for a slowdown in the region.
“Having strength in Asia will enable SMBC to increase businesses not only with Japanese and local companies but also with American and European companies operating in the region,” he added.
SMBC particularly focuses on Indonesia, where the middle class is expanding. “Financing still represents a lower proportion of the gross domestic product and support from foreign banks will be needed in the future” in the country.
The bank currently has a 40% stake, the upper limit set by Indonesian regulators, in Bank Tabungan Pensiunan Nasional, or BTPN, a midsize commercial bank in Indonesia. Kunibe also said SMBC would be looking to acquire overseas companies. “Transforming [BTPN] into a subsidiary is an option, and we want to acquire other companies as well.”
Kunibe cited Vietnam as another promising country. SMBC plans to double or triple its current consolidated gross profit in Asia to as much as 500 billion yen ($4.12 billion) within a decade.
Western promise
As for the U.S. and Europe, Kunibe said business is going well. “We are increasingly chosen as a core bank for influential companies as we offer extensive services not limited to just loans, including deposits and securities.”
Kunibe said that he is not thinking about acquiring banks in the U.S., where SMBC has a weaker management base than that of rival Mitsubishi UFJ Financial Group.
In Japan, where banks’ mainstay incomes from interest margins continue to shrink, SMBC will boost profitability by further promoting cooperation within the group.
SMBC and SMBC Nikko Securities mutually introduce customers. Also, SMBC Trust Bank, an SMBC subsidiary, will in November buy the retail banking division from the Japanese arm of Citigroup of the U.S.
The bank will seek wealthy new customers as it expands the acquired business under the new brand Prestia, taking advantage of abundant foreign currency products inherited from Citigroup.
(Nikkei)
