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Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-largest bank by market value, is in talks to expand in Turkey as an accelerating economy stokes demand for bank services, two people familiar with the situation said.
Sumitomo Mitsui and the Ankara-based Investment Support & Promotion Agency are working on an accord for the Tokyo-based lender to expand from a representative office of its unit Sumitomo Mitsui Banking Corp. in Istanbul, said the people, declining to be identified because the process is confidential.
Japan’s biggest lenders are looking abroad for growth as low interest rates and a shrinking population hamper domestic loan profitability. Mitsubishi UFJ Financial Group Inc. (8306) said yesterday it will apply for a bank license next month, joining rivals such as Mizuho Financial Group Inc. (8411) in seeking to take advantage of Turkish economic growth of 8.5 percent in 2011.
Sumitomo plans to help finance Japanese companies’ investments in Turkey, according to the people. The bank may also seek a license to set up a unit in the country, one of the people said. Mizuho Mizuho Corporate Bank Ltd., a unit of Japan’s third-largest lender by market value, also wants to get a license in Turkey or acquire a stake in a Turkish lender, Mizuho Chief Executive Officer Yasuhiro Sato said June 4.
Takashi Morita, a spokesman for SMBC in Tokyo, said nothing has been decided. Telephone calls to the Turkish investment agency, known as Ispat, weren’t immediately answered.
Turkey’s banking regulator doesn’t plan to cut a minimum threshold of $300 million capital investment to apply for a banking license, Mukim Oztekin, head of the regulator, told reporters in Ankara today. “We want a healthy growth in the banking industry and will continue to give licenses to institutions with capital power,” he said.
The banking industry, which had an asset size of 1.27 trillion liras ($702 billion) at the end of May, increased at an annual average of 10.5 percent in the past decade, he said.
Bank of Tokyo-Mitsubishi will apply next month for a banking license with an $300 million investment plan and 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,” Shoji Nakano, the lender’s head for Europe, Middle East and Africa, said July 16 in Istanbul.
The lender may also offer credit to “non-Japanese blue- chip companies,” he said.
Sumitomo Mitsui Financial Group fell 1.2 percent to 2,494 yen today in Tokyo trade, in a four-day falling streak. Mizuho Financial Group was unchanged at 128 yen and Mitsubishi UFJ Financial Group fell 1 percent to 373 yen.
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