Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank by assets, agreed to lend $227 mln to build a terminal at Moscow's Sheremetyevo Airport, in the largest loan by the bank to a Russian concern.
The Japan Bank for International Cooperation, a Japanese government-owned bank, will guarantee about $170 million yen of the loan, according to a press release posted on the bank's Web site today. Russian Prime Minister Mikhail Fradkov, who is in Japan, attended the signing ceremony for the loan today. Sumitomo Mitsui wants to lift to 15% the overseas share of total revenue from around 7% within three to four years, Teisuke Kitayama, the bank's CE said this month. Japan's biggest banks, including Sumitomo Mitsui, want to expand overseas as they struggle to increase margins in Japan, where interest rates remain the lowest among the world's biggest economies. Sumitomo Mitsui's profit plunged 27% in the Q3 as interest income declined. The bank also plans to maintain and strengthen its relationship with Goldman Sachs Group Inc., which has helped it to increase transactions in the US and Europe, according to Kitayama. Sumitomo Mitsui agreed four years ago to cover at least $1 billion of any losses on loans that Goldman makes to investment-grade customers. At the same time, Goldman agreed to pay ¥150 billion to acquire 50,100 preferred shares of Sumitomo Mitsui to help the Tokyo-based bank boost its capital. Shares of Sumitomo Mitsui have more than tripled since then. (Bloomberg)