Japan banks: cost of shifting to the US is high
Japan’s biggest lender is climbing the rankings ladder of the US syndicated loan market. Mitsubishi UFJ Financial Group is one among local lenders seeking growth outside Japan. History suggests that reversing declining profitability from this strategy shift will not work.
MUFG is on track to overtake Goldman Sachs and Barclays for US loans this year, according to Bloomberg data. Local peers Sumitomo Mitsui Financial Group and Mizuho already get more than a third of their earnings from overseas businesses.
This results from necessity rather than choice. At home, Japanese banks struggle with low profitability amid rock bottom rates. The Bank of Japan has stuck with its negative 0.1 per cent target for short-term interest rates, and zero per cent for the 10-year government bond yield.
This story originally appeared on: Financial Times - Author:Tax Cognition
