Asian Banks Buff Lending Image

Feb. 2, 2014 2:36 p.m. ET
HONG KONG—When Freeport-McMoRan Copper & Gold Inc., FCX 0.00% Freeport-McMoRan Copper & Gold Inc. U.S.: NYSE $32.41 0.00 0.00% Jan. 31, 2014 4:01 pm Volume (Delayed 15m) : 11.20M AFTER HOURS $32.50 +0.09 +0.28% Jan. 31, 2014 7:56 pm Volume (Delayed 15m): 1.25M P/E Ratio 12.28 Market Cap $33.65 Billion Dividend Yield 3.86% Rev. per Employee $624,500 01/22/14 Freeport-McMoRan Profit Falls … 01/13/14 Indonesia Details Mineral-Expo… 12/23/13 Freeport CEO Adkerson Granted … More quote details and news » FCX in Your Value Your Change Short position the world’s largest publicly traded copper producer, arranged $7 billion in financing last year, its roster of lenders included the usual catalog of European and U.S. banks. But it also boasted the biggest list of Asian lenders the company has ever dealt with.
Some 21 Asian lenders joined in on the deal, including five from Japan, nine from China and five from across Singapore, Taiwan, India and Indonesia, a spokesman for the company said in an emailed response to questions. The Phoenix-based miner is using the money to help pay for $20 billion of acquisitions.
Asian banks have been prominent on other high-profile deals, too. Verizon Communications Inc. VZ +0.82% Verizon Communications Inc. U.S.: NYSE $48.02 +0.39 +0.82% Jan. 31, 2014 4:00 pm Volume (Delayed 15m) : 17.82M AFTER HOURS $48.11 +0.09 +0.19% Jan. 31, 2014 7:31 pm Volume (Delayed 15m): 742,469 P/E Ratio 11.98 Market Cap $137.34 Billion Dividend Yield 4.41% Rev. per Employee $657,306 01/30/14 Verizon Sells $500 Million in … 01/30/14 FCC to Vote on Scrapping Telec… 01/28/14 Vodafone Shareholders Agree to… More quote details and news » VZ in Your Value Your Change Short position ‘s $12 billion package of loans in October linked to the buyout of its U.S. wireless partner included Agricultural Bank of China Ltd. 601988.SH -0.79% Bank of China Ltd. China: Shanghai ¥2.51 -0.02 -0.79% Jan. 30, 2014 3:04 pm Volume : 19.60M P/E Ratio 4.56 Market Cap ¥706.04 Billion Dividend Yield 6.97% Rev. per Employee ¥1,674,850 01/08/14 Bank of China Chooses London t… 01/08/14 China Presses Big Banks for Mo… 01/01/14 Chinese Banks Eye Global Bond … More quote details and news » 601988.SH in Your Value Your Change Short position , Bank of China Ltd. 601398.SH -0.87% Industrial & Commercial Bank of China Ltd. China: Shanghai ¥3.41 -0.03 -0.87% Jan. 30, 2014 3:05 pm Volume : 27.75M P/E Ratio 4.61 Market Cap ¥1228.11 Billion Dividend Yield 7.01% Rev. per Employee ¥2,118,810 01/29/14 ICBC to buy 60% of Standard Ba… 01/23/14 China Moves to Avert Shadow Le… 01/21/14 Heard on the Street: Dukes of … More quote details and news » 601398.SH in Your Value Your Change Short position and Bank of Communications Co. 601328.SH -0.53% Bank of Communications Co. Ltd. A China: Shanghai ¥3.78 -0.02 -0.53% Jan. 30, 2014 3:04 pm Volume : 26.52M P/E Ratio 4.34 Market Cap ¥286.36 Billion Dividend Yield 6.35% Rev. per Employee ¥2,997,300 12/19/13 China Pushes Ahead on Deposit-… 11/27/13 Chinese Banks to Sell Yuan Bon… 11/26/13 China’s BoCom, AgBank to Issue… More quote details and news » 601328.SH in Your Value Your Change Short position , among others.
Those deals reflect a push by Asia’s banks into new markets around the world. Their efforts come at a time when Western banks are reining in some lending as they recover from the global financial crisis.
Buoyed by strong credit ratings and rising deposits—Asian banks largely sidestepped the 2008 financial crisis—and flush with cash linked to ultra-loose monetary policy in the U.S. and Japan that has poured cash into Asia, lenders from the region led by the likes of Japan’s Mitsubishi UFJ Financial Group Inc., 8306.TO -2.57% Mitsubishi UFJ Financial Group Inc. Japan: Tokyo ¥607 -16 -2.57% Feb. 3, 2014 3:00 pm Volume : 80.28M P/E Ratio 7.93 Market Cap ¥8824.02 Billion Dividend Yield 2.31% Rev. per Employee ¥54,211,800 11/25/13 Asian Banks Are Lending Record… 11/14/13 Japan’s Top 3 Banks Raise Prof… More quote details and news » 8306.TO in Your Value Your Change Short position or MUFG, have become bigger players as they chase higher yields and look to diversify their business.
“Asian banks are growing outside Asia, there is just no doubt,” said Atul Sodhi, Hong Kong-based managing director and head of loan syndication for Asia Pacific at Crédit Agricole ACA.FR -2.18% Credit Agricole S.A. France: Paris €9.77 -0.22 -2.18% Feb. 3, 2014 12:10 pm Volume : 2.25M P/E Ratio N/A Market Cap €24.98 Billion Dividend Yield N/A Rev. per Employee €240,332 01/28/14 European Banks Show Signs of H… 01/22/14 Credit Agricole Sells Bulgaria… 01/15/14 HEARD ON THE STREET: French Ba… More quote details and news » ACA.FR in Your Value Your Change Short position and chairman of the Asia Pacific Loan Market Association.
A spokesman for Verizon declined to comment.
While the gains are nascent—MUFG, Mizuho Financial Group Inc. 8411.TO -3.65% Mizuho Financial Group Inc. Japan: Tokyo ¥211 -8 -3.65% Feb. 3, 2014 3:00 pm Volume : 240.87M P/E Ratio 7.00 Market Cap ¥5301.70 Billion Dividend Yield 3.32% Rev. per Employee ¥49,768,100 02/03/14 Jittery Investors Push Nikkei … 01/31/14 Mizuho 9-Month Profit Rises, D… 01/23/14 New Head for Mizuho Bank After… More quote details and news » 8411.TO in Your Value Your Change Short position and Sumitomo Mitsui Financial Group Inc. 8316.TO -3.79% Sumitomo Mitsui Financial Group Inc. Japan: Tokyo ¥4641 -183 -3.79% Feb. 3, 2014 3:00 pm Volume : 12.10M P/E Ratio 6.67 Market Cap ¥6821.40 Billion Dividend Yield 2.80% Rev. per Employee ¥69,526,100 01/29/14 Japan Lender SMFG Enjoys 28% J… 12/24/13 Sumitomo Mitsui Financial Grou… 12/12/13 SMFG Nears Deal for Railroad L… More quote details and news » 8316.TO in Your Value Your Change Short position are the only Asian banks in the top 20 rankings of global lenders last year—there are signs of Asian banks picking up business.
In 2007, MUFG was the only Asian bank in the top 20, Thomson Reuters data show. And since then it has jumped to seventh from 17th. Bank of China has moved to 29th from 124th and Singapore’s DBS Group Holdings Ltd. D05.SG +0.43% DBS Group Holdings Ltd. Singapore: SGX $16.54 +0.07 +0.43% Feb. 3, 2014 5:04 pm Volume : 3.74M P/E Ratio 10.34 Market Cap $40.35 Billion Dividend Yield 3.39% Rev. per Employee $649,278 02/02/14 Asian Banks Push Into New Mark… 11/11/13 GIC, Ayala Pay $680 Million fo… 11/07/13 India’s New Banking Rules Seen… More quote details and news » D05.SG in Your Value Your Change Short position has edged up to 40th place from 61st.
Both Mizuho and SMFG plan to build up their business in foreign loans, company representatives said. A spokesman for MUFG said the bank can lend at higher rates in markets outside Japan, bolstering returns. For example, in 2013 the Japanese bank was among the lenders on a $14.2 billion loan to Russia’s largest oil producer, state-controlled OAO Rosneft.
By contrast, French lender Société Générale GLE.FR -1.72% Societe Generale S.A. France: Paris €41.35 -0.72 -1.72% Feb. 3, 2014 12:09 pm Volume : 1.61M P/E Ratio 29.15 Market Cap €33.61 Billion Dividend Yield 1.09% Rev. per Employee €144,011 02/03/14 Probe Widens Into Dealings Bet… 01/29/14 SocGen Exits Lira Bet as Centr… 01/21/14 Gold-Price Banks Meet Amid Reg… More quote details and news » GLE.FR in Your Value Your Change Short position has slipped to 18th place in 2013 from ninth place in 2007. Embattled U.K. lender Royal Bank of Scotland Group RBS.LN -0.91% Royal Bank of Scotland Group PLC U.K.: London GBp336.90 -3.10 -0.91% Feb. 3, 2014 11:10 am Volume : 2.61M P/E Ratio N/A Market Cap GBp38.43 Billion Dividend Yield N/A Rev. per Employee GBp217,349 01/28/14 RBS to Cut Back on Forex Fixes 01/28/14 Barclays, Lloyds Plan Job Cuts 01/27/14 RBS Joins Deutsche Bank in Pur… More quote details and news » RBS.LN in Your Value Your Change Short position PLC has fallen to eighth place from third and Dutch bank ING Groep INGA.AE -1.90% ING Groep N.V. Netherlands: Amsterdam €9.65 -0.19 -1.90% Feb. 3, 2014 12:10 pm Volume : 7.92M P/E Ratio 10.85 Market Cap €37.79 Billion Dividend Yield N/A Rev. per Employee €904,161 11/06/13 ING to Speed Up Restructuring More quote details and news » INGA.AE in Your Value Your Change Short position NV has fallen to 20th from 13th. RBS declined to comment. A spokeswoman for ING said the league table moves reflect market conditions. A spokeswoman for Société Générale couldn’t immediately comment.
“European banks, in particular, are still trying to deleverage,” said Derek Ovington, CLSA’s head of regional banks in Asia. He also said that U.K.-listed but Asia-focused lenders such as HSBC Holdings HSBA.LN -0.59% HSBC Holdings PLC (UK Reg) U.K.: London GBp623.30 -3.70 -0.59% Feb. 3, 2014 11:10 am Volume : 8.37M P/E Ratio 10.90 Market Cap GBp118.07 Billion Dividend Yield 3.92% Rev. per Employee GBp186,774 01/29/14 China Manufacturing Contracts … 01/23/14 Standard Bank Falls Foul as FC… 01/21/14 OCC Letter to HSBC Spurred Int… More quote details and news » HSBA.LN in Your Value Your Change Short position PLC and Standard Chartered STAN.LN -0.28% Standard Chartered PLC U.K.: London GBp1236.50 -3.50 -0.28% Feb. 3, 2014 11:08 am Volume : 1.20M P/E Ratio 0.11 Market Cap GBp30.10 Billion Dividend Yield 2.89% Rev. per Employee GBp189,982 01/24/14 Standard Chartered CEO Dismiss… 01/23/14 Standard Bank Falls Foul as FC… 01/14/14 Standard Chartered to Reshuffl… More quote details and news » STAN.LN in Your Value Your Change Short position PLC continue to grow.
Analysis by the Bank for International Settlements, the central bankers’ bank, shows that at the end of September, Asian banks were expanding their cross-border lending—such as trade finance and loans—across the region, while U.S. banks scaled back exposure to emerging markets and Europeans held steady.
According to the BIS, the share of emerging-market loans for non-U.S. and European banks—led by banks in Asia, excluding Japan—rose to 12.8% at the end of September from 11.6% at the end of 2012.
But for the banks, this expansion isn’t without risk. A move by the U.S. Federal Reserve to slow the pace of its huge bond-buying program, which had the side effect of supplying Asia with cheap credit, could slow economic growth across the region. Investors have dumped currencies across emerging markets from Russia to South Africa to India and Indonesia.
That volatility could strain those companies exposed to market swings and hinder their ability to repay debt.
“We have become a bit more cautious about bank risk in emerging Asia with the impact of Fed tapering,” said Mark Young, head of Asia-Pacific financial institutions at Fitch Ratings. “Over the longer term you could see lower ratings,” he said. A credit-rating downgrade could push up the bank’s own cost of borrowing and trigger a pullback in lending.
China’s slowing growth is also unnerving investors. A gauge of manufacturing activity released in January showed its weakest level in six months, helping to cool demand for commodities. Iron-ore prices have fallen to six-month lows.
Japanese banks still are the biggest lenders from the region. Since the fourth quarter of 2008, foreign lending by Japanese banks—buoyed by the country’s ultra-loose monetary policy—has increased 34% to $3 trillion, according to an analysis by the International Institute of Finance.
In that period Japanese lending across emerging Asia and the Pacific grew 95%, while lending to Latin American and Caribbean borrowers jumped 140%. Loans to developed countries rose 25%.
Chinese banks are lending in part to fuel trade and growth by domestic companies. Foreign lending by China’s four largest banks has grown to $378 billion since 2008, $120 billion of which was lent in 2013 alone.
“We are seeing the international loan books of the mainland Chinese banks grow very, very quickly, but off a small base,” said CLSA’s Mr. Ovington.
The Chinese banks didn’t respond to requests for comment on Thursday, the eve of China’s Lunar New Year holiday.
Southeast Asian banks are also building their book, in particular on the regional stage. Singapore-based OCBC Bank O39.SG -1.40% Oversea-Chinese Banking Corp. Ltd. Singapore: SGX $9.17 -0.13 -1.40% Feb. 3, 2014 5:04 pm Volume : 6.03M P/E Ratio 12.07 Market Cap $32.00 Billion Dividend Yield 3.71% Rev. per Employee $408,904 01/24/14 OCBC Makes $5 Billion Deal to … 01/13/14 Singapore Bank Expands China P… 01/06/14 UBS Cool On OCBC’s Hong Kong P… More quote details and news » O39.SG in Your Value Your Change Short position increased its foreign lending by 22% in the year to Sept. 30—well ahead of the 11% growth in lending in Singapore. Overseas loans now make up 50% of the bank’s total gross loans, compared with 44% three years ago. The bank’s focus is on Malaysia, Indonesia and Greater China where margins are more attractive.
Rival DBS Group Holdings Ltd. increased its loan book by 19% on year to Sept. 30—around 55% of which came from outside Singapore. A $7 billion loan last year for Swiss oil-and-gas company Vitol Group SA featured DBS, according to Dealogic data.
“The key to our growth is our ability to leverage our Asian understanding and connect clients across the region,” said Chng Sok Hui, chief financial officer for DBS.
Some of the biggest financings in 2013 involved commodity and energy producers. A $17 billion credit facility arranged for trading and mining titan Glencore Xstrata GLNCY -0.61% Glencore Xstrata PLC ADS U.S.: OTCBB $10.60 -0.07 -0.61% Jan. 31, 2014 3:49 pm Volume (Delayed 15m) : 7,822 AFTER HOURS $10.70 +0.10 +0.94% Jan. 28, 2014 4:00 pm Volume (Delayed 15m): 19,439 P/E Ratio N/A Market Cap $70.38 Billion Dividend Yield 2.04% Rev. per Employee N/A 12/10/13 Swiss Village Votes to Donate … 12/01/13 Iran Deal Opens Door for Busin… 11/29/13 GrainCorp Takeover Veto Raises… More quote details and news » GLNCY in Your Value Your Change Short position PLC last year included the biggest Japanese lenders along with Australia & New Zealand Banking Group Ltd. ANZ.AU -1.00% Australia & New Zealand Banking Group Ltd. Australia: Sydney $29.83 -0.30 -1.00% Feb. 3, 2014 5:17 pm Volume : 5.43M P/E Ratio 13.29 Market Cap $82.68 Billion Dividend Yield 6.10% Rev. per Employee $720,534 01/20/14 China’s Economy Slows on Inves… 01/13/14 ANZ’s Smith Can’t Figure Hong … 01/13/14 ANZ CEO Says Big Asia Acquisit… More quote details and news » ANZ.AU in Your Value Your Change Short position
While some Asian lenders have long been present in global markets, the push overseas is expected to continue.
“When the Asian banks start growing in a new market, they go for the whole hog,” said Crédit Agricole’s Mr. Sodhi.
—Mike Cherney and Atsuko Fukase contributed to this article.
Write to Enda Curran at enda.curran@wsj.com

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