Resona Sees 25% Loan Jump to Japan Firms Operating in Asia

Resona Holdings Inc. (8308), Japan’s fifth-largest bank by market value, plans to boost loans to Japanese businesses expanding in Asia by 25 percent within a year, its incoming president said.

Kazuhiro Higashi, who takes the post on April 1, is targeting 50 billion yen ($521 million) in new loans to domestic companies with operations in countries including China, Thailand and Indonesia by March 31, 2014, he said in an interview. Such loans total 40 billion yen so far this fiscal year.

“We’re seeing growing interest in Asia expansion among our clients,” Deputy President Higashi, 55, said March 13. “We’ve had more than 700 consultations on the subject over the last six months -- that’s been quite a surprise.”

Resona, which depends entirely on domestic business, follows bigger Japanese rivals including Mitsubishi UFJ Financial Group Inc. in tapping credit demand from faster- growing economies as deflation and a shrinking population limit growth at home. The bank is now seeking a tie-up with a Malaysian lender, similar to an alliance struck with Manila- based Rizal Commercial Banking Corp. (RCB) last year, he said.

With no banking licenses outside of Japan, Resona has relied on partners such as State Bank of India, the nation’s largest lender by assets, to boost loans to domestic companies with offshore operations.

Photographer: Noriko Hayashi/Bloomberg

Resona Holdings Inc. incoming President Kazuhiro Higashi. Close

Resona Holdings Inc. incoming President Kazuhiro Higashi.

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Photographer: Noriko Hayashi/Bloomberg

Resona Holdings Inc. incoming President Kazuhiro Higashi.

Bailout Payback

The bank is among lenders that were rescued by taxpayers after collapsing under bad loans in the wake of Japan’s property and stock-market bubble in the 1990s. The government has injected 3.1 trillion yen into Resona since 1999.

The Tokyo-based bank owes the government 872 billion yen, including 610 billion yen of preferred shares and 262 billion yen of common stock.

Following rival Sumitomo Mitsui Trust Holdings Inc. (8309)’s bailout repayment announcement earlier this month, Higashi said there is no change to his bank’s payback plan announced in November 2010. About 450 billion yen of preferred stock remains to be bought back by March 2016 as part of that plan, he said.

Shares of Resona have surged 33 percent this year in Tokyo, and rose 1.4 percent to 520 yen as of 9:42 a.m., the price at which the government bought them. Japan’s benchmark Topix Index has gained 23 percent this year.

“We don’t plan to take any action because of the rally in the shares,” Higashi said, two days after Sumitomo Mitsui Trust, bought back 200 billion yen of its own shares from the government.

Photographer: Noriko Hayashi/Bloomberg

A man uses a mobile phone as he walks past the Resona Holdings Inc. offices in Tokyo. Close

A man uses a mobile phone as he walks past the Resona Holdings Inc. offices in Tokyo.

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Photographer: Noriko Hayashi/Bloomberg

A man uses a mobile phone as he walks past the Resona Holdings Inc. offices in Tokyo.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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