Search Keywords
Financial Times Wall Street Journal Economist
News Period From   To
News: 60885    Funds: $437    Pays: $524

Go Back to
News List
This News on
Daily Paywall
  Rated 294 | Views 1599
Rate it | Share it 

Asia Markets
SMFG President: Oil Drop May Lead to More Caution on Deals
From the Wall Street Journal of Wed, 24 Dec 2014 10:04:05 EST
Koichi Miyata, president of Sumitomo Mitsui Financial Group
Koichi Miyata, president of Sumitomo Mitsui Financial Group Bloomberg News

The president of Sumitomo Mitsui Financial Group Inc. said the recent fall in oil prices may make him more cautious about selecting projects for financing, although he doesn’t see a big impact on the bank’s current energy-related portfolio.

“No one expected this situation a year ago, and if crude oil prices drop to the level of $50, people may have to think about slowing down new oil development,” said Koichi Miyata said in an interview this week.

In mid-December, crude prices dropped to their lowest level in five years. Brent crude, the international benchmark, tumbled to about $60 a barrel from more than $100 a barrel five months ago.

Japanese banks have been beefing up their presence in project finance around the globe, seeking new business in areas such as infrastructure, resources and transport because loan demand is weak at home.

SMFG is Japan’s second-largest lender by revenue after Mitsubishi UFJ Financial Group Inc. According to Dealogic, Sumitomo Mitsui Banking Corp., the banking unit of SMFG, ranks third after State Bank of India and MUFG in global project finance this year to date.

This year Sumitomo Mitsui was among the bookrunners for a $7.7 billion loan for a U.S. shale gas project, the Louisiana-based Cameron liquefied-natural-gas plant.

“Regarding project finance, we run a simulation from various angles in advance—including the case of a plunge in oil prices,” said Mr. Miyata, expressing confidence that the upheaval in energy wouldn’t hit his bank hard. He said Sumitomo Mitsui was focusing on the quality of projects rather than the number of deals.

Mr. Miyata also said Russia’s recent troubles including a ruble plunge wouldn’t be a big concern for his bank despite its $5.7 billion loan balance in the country. “Our exposure includes deals involving blue-chip companies and Japanese-related projects so I’m not worried,” Mr. Miyata said.

Domestically, Mr. Miyata reiterated that his company has no immediate plans to further reduce its exposure to Japanese government bonds. “We’ve minimized the exposure level as much as we could,” he said.

Japanese banks are a big holder of JGBs, whose credit rating was recently lowered to A1 from Aa3 by Moody’s Investors Service. Mitsubishi UFJ has about ¥40 trillion ($331.43 billion) in JGBs, while Mizuho Financial Group Inc., the third of Japan’s three megabanks, has about ¥22 trillion. Sumitomo Mitsui has been more aggressive about reducing its exposure, holding ¥12 trillion in JGBs while shifting investments to stocks.

“For investments, JGBs are no longer attractive because of razor-thin yields, but we have to hold them at a certain level as a collateral for various trading activities,” said Mr. Miyata, who long served as the head of the bank’s market division.

Mr. Miyata said Sumitomo Mitsui might add to its Japanese government bond portfolio if the bonds begin to factor in an economic recovery and a recent modest rise in consumer prices. “But that won’t happen now or early next year,” he said.

Write to Atsuko Fukase at

This article is provided by, which is published and distributed by Paolo Cirio Ltd., registered in England, number 8188080. Registered Office: Suite 36, 88-90 Hatton Garden, City of London, EC1 N8PG, United Kingdom. Paolo Cirio Ltd. alone is responsible and liable for information and services provided through Daily Paywall’s newspaper and website.

The most relevant news can also help with your daily little expenses!

Earn Money
Offer Money
Buy Advertising
Buy Artwork Article

Similar Articles
Enjoy The Real Value of Information