Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, will apply for a banking license in Turkey next month as it joins Mizuho Financial Group Inc. (8411) in seeking to take advantage of the country’s accelerating economy.
The Bank of Tokyo-Mitsubishi UFJ Ltd. unit will make a $300 million capital investment, the minimum required for a license by the Ankara-based regulator, Shoji Nakano, the lender’s head for Europe, Middle East and Africa, said yesterday in Istanbul. The bank is expected to start in October 2013 and will be based in Istanbul, he said.
Japan’s biggest lenders are looking abroad for growth as low interest rates and a declining population hamper loan profitability at home. Mizuho Corporate Bank Ltd., a unit of Japan’s third-largest lender by market value, wants to get a license in Turkey or acquire a stake in a Turkish lender, Mizuho Chief Executive Officer Yasuhiro Sato said on June 4.
Turkey’s $772 billion economy expanded 8.5 percent last year, luring banking industry investment. Citigroup Inc. (C:US) sold a 10.1 percent-stake in Akbank TAS (AKBNK), Turkey’s second-largest lender by market value, for $1.15 billion to money managers on May 25. Moscow-based OAO Sberbank (SBER) on June 8 agreed to buy Franco-Belgian lender Dexia SA (DEXB)’s stake in Denizbank AS (DENIZ) for $3.53 billion.
“We are hoping to increase our exposure to Turkey by three times to about $5 billion in three to five years,” Nakano said. “We may increase our capital investment as our business grows through the Istanbul branch in Turkey in the next three to five years,” he said. The bank can also help finance large projects through its London branch, he said.
Mitsubishi UFJ shares (8306:US) rose 0.8 percent to 378 yen at 11 a.m. in Tokyo. They have climbed 15 percent this year, more than the Topix Banks Index (TPNBNK)’s 8.7 percent gain. Japan’s benchmark 10- year bond yielded 0.77 percent, close to the lowest since 2003.
Bank of Tokyo-Mitsubishi aims to finance as much as 85 percent of Japanese firms in Turkey as the number of the nation’s companies there “is expected to triple in five to seven years from 140,” Nakano said. The lender may also offer credit to “non-Japanese blue-chip companies,” he said.
The bank, which doesn’t plan acquisitions in Turkey, will provide funding for infrastructure projects, mainly in energy production, and also in service and manufacturing industries such as carmaking, electronics, medical equipment production and cosmetics, Nakano said. It isn’t planning to offer retail banking services, he said.
Bank of Tokyo-Mitsubishi may also provide financing for the Turkish government’s planned sale of power grids later this year should the projects prove feasible, Nakano said.
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