INTERVIEW-Japan's SMFG targets Asia non-banking retail market

Tue Dec 25, 2012 3:00pm GMT

Quotes

   

* Eyes sales finance in Southeast Asia

* Plans to expand consumer finance operations in China

By Taiga Uranaka and Taro Fuse

TOKYO, Dec 26 (Reuters) - Sumitomo Mitsui Financial Group Inc plans to speed expansion in Asia via its non-banking units like consumer finance and credit, hoping to lure the region's retail clients, the head of Japan's third-largest lender by assets said.

"What we have in mind is sales finance for cars, air conditioners and TVs in Southeast Asia. It does not have to be (done by our core bank) SMBC. We can use a vehicle best suited for the purpose," Koichi Miyata, president of SMFG, told Reuters in an embargoed interview conducted on Friday.

SMFG and other top Japanese banks anticipate that strong growth in Asia will fill the void left by the retreat of troubled European rivals.

Japanese banks' overseas activities have so far been limited to corporate finance work like lending to blue-chip companies and infrastructure projects. Retail businesses remain a major challenge for those banks given their lack of branch networks outside Japan.

Executives say they need full-scale retail operations in Asia if they are to enjoy real growth potential in the region's emerging economies. Non-banking units - financial institutions that do not take deposits and are therefore subject to less rigorous regulation - are able to enter markets more nimbly, they say. SMFG has a card and shopping credit unit, Cedyna.

Motorcycle loans in Southeast Asia are among areas of growing interest for Japanese banks, given the region's huge bike market and the dominance of Japanese manufacturers like Honda Motor.

Jaccs, the consumer credit unit of Japan's No.1 lender Mitsubishi UFJ Financial Group, last month agreed to buy a 40 percent stake in Jakarta-based motorcycle loan company PT Sasana Artha Finance.

Mizuho Financial Group also bought a majority stake in Indonesian auto loan firm PT Balimor Finance last year.

SMFG's Miyata said his company is also looking to tap the growing consumer finance market in China.

Marketed under the brand name Promise, SMFG's consumer finance unit, which extends unsecured loans to retail customers, runs operations in Hong Kong, mainland China and Thailand as well as Japan. In Hong Kong, its outstanding loans were about HK$2 billion ($258 million) as of the end of September.

"The business in Hong Kong is now running on its own capital without debt. It's now a money-making operation. From now on, we would like to expand more in mainland China," Miyata said. Currently, Promise has two locations in China, Shenyang and Shenzhen.

($1 = 7.7506 Hong Kong dollars) (Reporting by Taiga Uranaka; Editing by Daniel Magnowski)

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