Japanese banks have been more aggressive than their Chinese peers in expanding abroad since the global financial crisis, the IMF said in a report that also highlighted differences in their approaches.
Banks in both nations have used their strong balance sheets to seize growth opportunities overseas as European and US lenders retrench from Asia, the IMF said in its Global Financial Stability Report.
Yet Japanese banks expanded on a larger scale and diversified their businesses, making them less vulnerable to funding issues, the report showed.
Driven by limited growth prospects at home, Japan’s three biggest banks increased overseas loans to more than 31 percent of their total advances in 2013 from 18 percent in 2009, the IMF said.
Chinese lenders expanded loans abroad to 9.2 percent from 6.1 percent in the period, the IMF said.
Chinese banks have been opening foreign offices and branches, mainly to follow overseas expansion by their Chinese customers, the IMF said.
In contrast, Japanese lenders have been making acquisitions, spending more than ￥1 trillion (US$8.3 billion) from 2012 to last year on targets ranging from banks to asset managers, it said.
Mizuho Financial Group Inc is among Japanese banks that are diversifying revenue sources by increasing fee income, while Chinese lenders are focusing on interest income from loans to compatriots’ foreign units, potentially limiting their ability to expand, the report found.
With loans growing faster than deposits, Chinese banks have become more reliant on wholesale funding to fill the gap, making them vulnerable to currency and liability “mismatches,” the IMF said.
The average ratio of overseas loans to deposits at China’s four biggest banks rose to more than two from about 1.5 in the past five years, it said.
The ratio of total liabilities to deposits abroad, a measure of banks’ dependence on funding sources other than customers’ savings, has been climbing steadily since 2009 for Chinese banks, while the portion for Japanese lenders declined, the report said.
Agricultural Bank of China Ltd (中國農業銀行), the least globalized among the country’s largest banks, drove the increase in the loan-to-deposit ratio after embarking on aggressive strategies to expand overseas, the IMF said.
The ratio for Bank of China Ltd (中國銀行), the most international of the four, was less than one.
Lenders from both countries continue to look abroad to reduce reliance on their home markets.
“Growth opportunities still abound for both Chinese and Japanese banks, as their domestic clients increase their outward expansion,” the IMF said.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to