The largest lender by assets in Japan, Mitsubishi UFJ Financial Group (MUFG) Incorporated, is currently adding staffs in Asia in an effort to be among the top ranks of banks in the trade finance industry. MUFG and other Japanese lenders are expanding in Southeast Asia to counter zero interest rates in Japan.
According to Ken Stratton, the head of Asia and Oceana transaction banking sales in a telephone interview last month, MUFG has recently hired 4 trade finance bankers from their competitors which include Australia & New Zealand Banking Group Ltd. and HSBC Holdings Plc. as they seek to be among the world’s top 5 lenders for international commerce by 2020.
Major trade finance banks have cut down their loan books as prices of commodities drop and decrease shipments to and from China trimmed the dollar value of loans. Identifying the market is a core area; MUFG saw the setback as an opportunity which prompted them to set a goal last year for a 70% increase in business by the fiscal year ending March 2018.
“Over the last three years or so, we have seen quite a number of the large global banks pull back on lending as they come upon challenges in their home markets, especially in the U.S.,” said Stratton.
“BTMU has really stepped up to the plate and provided some great funding to these global corporates,” he added, referring to the Bank of Tokyo-Mitsubishi UFJ unit.
MUFG set up transaction banking business in Asia and Oceana in May 2012, where they have over 150 employees in 122 countries, including 70 staffs in Singapore. The unit also offers cash management.
The lender is ranked 9th in market shares for arranging trade finance for many major Asian companies, according to a report in September last year. HSBC has topped the ranking in trade finance, followed by the London-based Standard Chartered Plc and New York-based Citigroup Inc.
The profitability of trade finance in the region, however, has been intensified after banks in Japan and elsewhere started to expand in the business and as transaction values dropped. Commodity prices, on the other hand, according to Bloomberg Commodity Index, have been low 6 years in a row as oil and copper dropped.
Mike Smith, the ex CEO of ANZ, said, returns from trade finance ending September 30 were a little too low. Even with ample liquidity, MUFG has also faced ample liquidity, according to Stratton.
“Although we are currently slightly behind our internal targets for Asia and Oceania, we are on track to achieve our March year-end targets for transaction banking,” Stratton said.