Japanese banks cautiously return to post-crisis Asia<\/p>\n
TOKYO (Reuters): Three years after a devastating currency
\ncrisis hit the economies of East and Southeast Asia, Japanese
\nbanks are cautiously resuming lending to the region through
\nsyndicated loans, bankers say.<\/p>\n
Japan's banks, long among the biggest lenders to the area,
\nhave been more cautious than their Western counterparts about
\nreturning, and have abandoned their indiscriminate, volume-
\noriented approach of the pre-crisis era.<\/p>\n
\"Japanese banks are increasingly taking a positive stance
\ntoward lending in East Asia as confidence returns to the region,\"
\nsaid Hideyuki Nimura, general manager of the syndication office
\nat Bank of Tokyo-Mitsubishi Ltd's structured finance division.<\/p>\n
Syndicated loans, in which several international banks come
\ntogether to extend large sums of money to companies, comprise
\nperhaps less than 10 percent of Japan's commercial lending to the
\nregion but that share is growing, as banks seek a relatively low-
\nrisk means of increasing their exposure in the region.<\/p>\n
The volume of new syndicated loans by global banks in Asia
\nsurged to $94.28 billion in the first half of 2000 from $48.32
\nbillion in the same period last year, according to Thomson
\nFinancial Securities Data.<\/p>\n
And Japanese banks are leading the charge.<\/p>\n
Fuji Bank arranged the largest volume of syndicated loans in
\nthe period with $10.76 billion, followed by Dai-Ichi Kangyo Bank
\nwith $8.17 billion and Citigroup with $7.51 billion.<\/p>\n
In the late 1980s Japanese banks competed fiercely for lending
\nopportunities in the region, resulting in thin margins for loans
\nto borrowers with high credit risk.<\/p>\n
The banks have since grown more sophisticated and are not
\nreturning to their quantity-over-quality approach.<\/p>\n
\"Japanese banks are particularly selective in loans to local
\nenterprises,\" said Makoto Oshima, general manager of the global
\nfinance and investment banking division at Sanwa Bank Ltd<\/p>\n
Banks examine not just the credit risk of a company but the
\ncredibility of the management and the risk profile, including
\ntheir track record in repaying previous loans, Oshima said.<\/p>\n
They are also taking a closer look at sovereign risks.<\/p>\n
\"Banks are still reluctant to extend new loans to countries
\nsuch as Thailand and Indonesia that are behind schedule in their
\nreform plans,\" said Tomoo Kinoshita, head of the Asian economic
\nresearch unit at Nomura Research Institute Ltd, a research arm of
\nNomura Securities.<\/p>\n
They are struggling to get loans repaid in those countries in
\nthe absence of proper bankruptcy laws that require companies to
\nrepay loans with current income, Kinoshita said.<\/p>\n
Among the favorite destinations in the current syndicated
\nlending boom are South Korea, the Philippines and Malaysia.<\/p>\n
The net result is that Japanese commercial lending to many
\nparts of the region has stopped falling.<\/p>\n
\"Lending has bottomed out this year for some economies in
\nAsia,\" Sanwa's Oshima said.<\/p>\n
At the end of 1999, Japanese bank claims outstanding to the
\nrest of Asia totaled $65.05 billion, down 24 percent from the end
\nof 1998, according to the Bank for International Settlements
\n(BIS).<\/p>\n
That contrasts with slower declines or actual increases in net
\ncommercial lending last year by Western banks.<\/p>",
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