The Re-emergence of Japanese Banks in Asia

Abstract

In an effort to diversify their lending and raise profits, Japanese banks are expanding overseas, particularly in other countries in Asia.¹ As they move toward less defensive financial positions—including by reducing government bond investment and expanding uncollateralized small and medium-size enterprise (SME) lending—banks are also re-establishing operations in Asia that were scaled back in the wake of the collapse of the bubble as well as the 1997–98 Asian crisis. These operations mainly comprise providing lending, derivatives, and cash management services to Japanese companies as they shift production and distribution into Asia, but they also increasingly include transactions with non-Japanese clients. Japanese banks’ strategies in Asia differ from those in Europe and the United States, where they focus more on investment banking services such as mergers and acquisitions and securities lending.