SMBC provides pathway to Asia for local businesses
Australia represents a mature market with considerable ongoing potential for Sumitomo Mitsui Banking Corporation (SMBC). This Japanese bank has had a presence in Australia since 1984 and now operates as an integrated financial services organisation providing banking, leasing and debt capital market services. Between March 2007 and September 2016, SMBC grew its asset portfolio from less than A$4 billion to nearly A$27 billion at an average compound annual growth rate of 23 per cent.
Investing in Australia by supporting multibillion dollar projects
SMBC has an impressive record in supporting some of Australia’s largest and best-known projects as a lead project financier.
These projects - which include the Ichthys Liquefied Natural Gas and the Roy Hill Iron Ore developments - have had a significant socio-economic impact and benefit to the country.
SMBC’s role in enabling these projects highlights a deep commitment to Australia and recognition of its potential.
‘Australia is SMBC group’s highest country exposure in the Asia and Oceania region outside Japan at US$24.4 billion,’ says Tom Tanaka, SMBC’s General Manager and Country Head in Australia. ‘In terms of loan ratios globally, Australia has become the second largest market for SMBC after the United States, making up 8.1 per cent of SMBC’s total loan portfolio outside Japan.
‘Australia has therefore become of fundamental interest and importance to the SMBC group.’
This recognition by SMBC of Australia’s potential is not limited to energy and resources. The financial services business has exposure to a wide range of industries, including banking &finance, infrastructure, property and services. The diverse loan portfolio is made up of mainly recourse and non-recourse/investment bank-style loans such as project and structured finance loans.
SMBC has grown steadily since opening in Australia in 1984 as Sumitomo Perpetual Australia Ltd. By 2001, the company had established a wholly-owned subsidiary, Sumitomo Mitsui Finance Australia, to provide core banking products to a wider base of corporate clients. Five years later, SMBC received the license to set up a branch in Sydney.
A rapid expansion of activities in Australia followed, including the setup of a new local capital markets division, SMBC Nikko Capital Markets Ltd, in Sydney in 2012; a new branch of SMBC in Perth in 2013; and a local lease financing division, SMBC Leasing and Finance Inc, in Sydney in 2015.
By December 2016, SMBC was the eighth largest banking group in Australia with a major syndicated loans’ book value of about A$2.8 billion and about 200 employees in Australia.
The award of the banking licence sparked considerable growth in SMBC’s Australian asset portfolio; over the past decade this portfolio has risen from less than A$4 billion to nearly A$27 billion by the end of 2016 at an average compound annual growth rate of 23 per cent.
SMBC is keen to assist Australian companies in entering regional markets, particularly in Asia, giving them faster access to a wide range of beneficial products and services.
The company’s long-term vision is to become a truly Asia-centric financial institution, acting as a gateway for businesses outside the region to Japan and Asia.
SMBC has proven credentials across the globe in this area: for example, the bank was the lead arranger to support Lendlease Corporation’s S$2.8 billion urban renewal project at Paya Lebar in Singapore in 2015.
Closer to home, SMBC Nikko Capital Markets supported Mirvac in tapping Asian capital markets, with an inaugural transaction utilising the Euro Medium Term Note (EMTN) program. This transaction provided Mirvac with an alternate low-cost funding source outside Australia and the United States.
Another notable transaction involved Treasury Wine Estates (TWE) and SMBC Leasing and Finance Inc’s Sydney Branch undertaking an asset leasing program. This transaction provided the foundation for SMBC to further support TWE’s expansion in Japan, which TWE has seen as a growing market for new opportunities following the effect of the 2015 Japan-Australia Economic Partnership Agreement. SMBC is now working to provide TWE with cash management facilities, as well as relevant information for business development, in Japan.