Tuesday, 27 January 2015

The Cathford Group Credit Inc Tokyo Loan Review Tips: Japan banks to bulk up India presence on improving ties

Faced with a shrinking economy and tepid loan demand at home, Japan's largest banks are looking to bolster their presence in India, enthused by Prime Minister Narendra Modi's reform agenda and improving ties between the two countries.

While some European and US lenders are sitting on the fence after being bruised by the country's sharp slowdown, Japanese banks are betting aggressively on Modi's pledge to restart growth and attract foreign investment.

Standard Chartered (STAN.L), the biggest foreign player in India, said it remained watchful on the country after the slowest growth since the 1980s hit many of its corporate clients.

Financial Group Inc (8411.T) plan to grow their loan books through branch openings and offerings of new services such as corporate deposits, M&A financing and debt capital market advisory, bank executives said.

They see an opportunity to expand in a sector dominated by inefficient state-owned banks and where foreign lenders control only 6 percent of total banking assets. By contrast, foreign banks control nearly a third of banking assets in Indonesia and more than a fifth in Brazil. With Japan setting a target of doubling investments in India within five years and New Delhi scrambling to attract long-term investment to shore up its creaky infrastructure, Japanese banks are trying to move quickly.

"Our balance sheet is strong. We can absorb our lending exposure to our Indian clients... better than European, American banks," Mizuho Bank India CEO Shinichiro Kashiwagi said.

India is the key focus market for Mizuho Bank in Asia, besides Japan, China, South Korea and Taiwan, he told Reuters.

In a sign India is willing to boost business and political ties with Japan, Modi visited Tokyo in his first major foreign visit after a landslide electoral victory in May.

Mizuho, which received approval for its fifth Indian branch in Gujarat days before Modi's Tokyo visit, is hiring and will move its local headquarters in Mumbai to a bigger premises.

These bonds could be a cheap borrowing option for Indian companies. But Japanese buyers may be reluctant to buy paper issued by Indian companies, few of which are credit-worthy.

Furthermore, winning business in a market where foreign banks' operations are tightly regulated could prove an uphill struggle, financial services consultants say.

Other risks include bad debts, a factor likely to keep Japanese banks focused on big companies, rather than smaller or medium-sized ones. A tenth of India's total loans is considered non-performing or has been restructured.


Buoyed by Modi's commitment to get rid of frequent power blackouts and bumpy roads, Sumitomo Mitsui Banking Corp, seeks to tap more project finance business, said Daisuke Inoue, a senior executive at the lender's international banking unit.

Rival MUFG, with a 22 percent stake in Morgan Stanley (MS.N), plans to work closely with the U.S. bank to help finance an expected wave of foreign acquisitions by Indian firms.

For those transactions, MUFG will offer its balance sheet and Morgan Stanley its advisory services, said Taiju Hisai, India head of Bank of Tokyo-Mitsubishi UFJ, the banking unit of MUFG.

Sunday, 25 January 2015

The Cathford Group Credit Inc Tokyo Loan Review Tips: BoJ may extend deadline, expand loan schemes next week

TOKYO: The Bank of Japan may next week decide to expand two loan schemes aimed at encouraging commercial banks to lend more and extend them beyond their current March expiry date, sources familiar with the central bank's thinking said.

Many BoJ officials feel that the programmes ought to be continued beyond March. But there is no consensus yet on details such as how long they should be extended for or by how much they should be increased, the sources said on condition of anonymity.

If the nine board members can reach agreement, the BOJ may announce a decision next week, the sources said.

If preparations take more time, the decision may be delayed until next month, they added.

"There seems to be decent demand among banks for the loans and if so, there is no point ending the programmes" when they expire in March, one of the sources said. Under its "quantitative and qualitative easing" programme, or QQE, the BoJ is buying government bonds and risky assets aggressively in a bid to double base money in the economy and achieve its 2 percent inflation target.

Aside from asset purchases, the BoJ has several loan programmes including one that aims to encourage banks to lend more to industries with growth potential.

Another scheme, introduced in 2012, offers cheap funds to banks that boost lending in general.

Both schemes offer banks loans for up to four years at a 0.1 percent interest rate and were expanded in February last year.

The balance of loans extended under the programmes exceeded 20 trillion yen ($171 billion) last year and reached nearly 25 trillion yen as of Jan. 10.

With the BoJ's massive bond purchases nudging yields into negative territory and crowding out investors, many BoJ officials are reluctant to expand asset purchases under QQE any time soon.

But the central bank is set to cut its consumer inflation forecasts at next week's rate review due to slumping oil prices and may come under pressure for not focusing more on the slowdown in inflation, some analysts say.

While expanding the loan schemes by definition won't be tantamount to monetary easing, it will help the BoJ fend off such criticism, said Izuru Kato, chief economist at Totan Research.

"The BoJ doesn't have many policy tools left so it may use the loan schemes to appear as if it's doing something to address the slowdown in inflation," he said.

Friday, 23 January 2015

The Cathford Group Credit Inc. Tokyo Loan Review Tips Japan hints at resuming yen loans

ISLAMABAD: The positive economic reviews in the International Monetary Fund’s loan programme for Pakistan were encouraging for Japan to resume its yen loans, said Japanese Minister of State Katsunobu Kato on Thursday.

During a meeting with Finance Minister Ishaq Dar in Tokyo, the state minister assured Pakistan that Japan would continue to provide assistance for the settlement of internally displaced persons (IDPs), eradication of polio, flood mitigation and the fight against terrorism.

“We have pledged to work with and support Pakistan in the areas of economy, security, democracy and rule of law,” he said while appreciating the efforts put in by Pakistan for the development of economy and improvement of security. Earlier, speaking at a luncheon hosted by Japan Pakistan Parliamentary Friendship League President Seishiro Eto and former Japanese foreign minister Koichiro Gemba, Dar invited Japanese companies to take full benefit of the Special Economic Zone being established for them in Sindh.

He also discussed enhancement of trade volume between the two countries during a meeting with Japan External Trade Organisation Chairman Hiroyuki Ishiguro.

“Prospects of investment in Pakistan are bright due to the government’s effective policies. Infrastructure development and terrorism pose major challenges but necessary steps have been taken to address them,” he said.

Dar also spoke about the expanding halal food industry and urged Japanese investors to explore the sector in Pakistan. Globally, the halal food market is estimated at $3 trillion.

“This sector in Pakistan is a gateway to 470 million Muslims and holds great potential for the global halal Industry,” he said. “It is the right time to encourage international alliances by facilitating entrepreneurs and highlighting Pakistan as an emerging market for halal products and services.”

Dar said with the help of Japanese technology and investment and Pakistan’s resources, joint ventures could be established for producing goods with Pakistan’s halal certifications. Industries could be set up anywhere in the country, though proximity to the transport hubs, especially in designated areas such as the Japanese Special Economic Zone, would be beneficial.

Replying to a question, the minister said the Pak-China Economic Corridor, while benefitting the entire region including central Asian states, India and Afghanistan, would also help Japan in accessing Gulf nations.