Japan's top bank eyes Singapore as base to tap Asean's growth needs

Mr Hirano says Bank of Tokyo- Mitsubishi UFJ is looking to the region to broaden its international exposure.
Mr Hirano says Bank of Tokyo- Mitsubishi UFJ is looking to the region to broaden its international exposure.

Japan's largest bank sees South-east Asia as the world's highest-growth region, offering plenty of opportunities - and says Singapore, in particular, has a crucial role.

Mr Nobuyuki Hirano, chairman of the Bank of Tokyo-Mitsubishi UFJ (BTMU), said the bank is looking to the region to broaden its international exposure.

The BTMU is particularly interested in using Singapore as a base to tap the region's need for infrastructure financing, while partnering the Monetary Authority of Singapore (MAS) to push the boundaries of financial technologies.

"We really believe Asean has the highest growth potential globally, with average growth of 5 per cent," Mr Hirano told The Straits Times in an interview last week when he was in town to attend the Singapore Summit. "The middle-class population is growing, the economic structure is becoming more robust, and if the Asean Economic Community is successfully implemented, I expect that growth to be sustained over the years."

The BTMU is part of Japanese financial giant Mitsubishi UFJ Financial Group (MUFG). Mr Hirano is also the latter's group president and chief executive

The MUFG group has deployed enormous resources in recent years to deepen its presence in Asean, including a 170.6 billion baht (S$6.7 billion) acquisition of a controlling stake in Thailand's Bank of Ayudhya in 2013. In January this year, it spent 36.9 billion pesos (S$1 billion) to buy a 20 per cent stake in Philippine lender Security Bank. The bank runs its headquarters for Asia and Oceania out of Singapore, where it employs about 1,400 staff and focuses mainly on corporate and institutional banking.

Singapore's position as one of the international trade and business hubs can help the BTMU push for further growth in trade financing, Mr Hirano believes.

Infrastructure financing is another area in which the 64-year-old banker has bold ambitions. The MUFG group was the top project finance institution globally last year, with 143 deals or 5.8 per cent of global market share under its belt.

On this front, Mr Hirano hopes to see strong cooperation between his bank and the MAS. "I am very interested in the MAS initiative to develop an infrastructure loan distribution platform. The infrastructure investment demand is gigantic - about US$8 trillion (S$10.9 trillion) in the current decade - and asset managers' appetite for diversified asset classes is also rising.

"I think we can contribute to creating the foundation of such a platform that can link the supply side and demand side, where we can trade and sell brown field infrastructure debt as, for instance, bonds."

Mr Hirano sits on the MAS' International Advisory Panel. Discussions at the panel are now focusing strongly on ideas of fintech and smart nation, he said, adding that the BTMU is committed to sharing its experience and innovation with Singapore.

Last Friday, the BTMU signed a deal with IBM to pilot the use of blockchain in contract management here, with the aim to apply the solution within its business in 2017.

Meanwhile, Mr Hirano expects the bank to launch a new digital transformation lab here next year. The lab will be BTMU's first outside of Japan and the United States.

The fintech journey that BTMU shares with Singapore is parallel to the digitisation of the economy that Prime Minister Shinzo Abe's administration is driving in Japan. These efforts are no less important than monetary policies, he stressed.

The Bank of Japan will hold its policy meeting tomorrow, and market watchers are anxiously awaiting decisions on interest rates.

Mr Hirano declined to predict the meeting's outcome. He added: "Of course monetary policies are important, but we also need to focus on growing the real economy.

"In my opinion, the current Japanese equity valuation is extremely low. Why? Because of the weak expectation of Japan's future growth. So what we need to change is not the financial market or interest rate, but the nation's expectation for growth, by revitalising the economy through structural reform of industries and labour market."

Correction note: The story has been edited to correct the name of Japanese financial giant Mitsubishi UFJ Financial Group (MUFG). We are sorry for the error.

A version of this article appeared in the print edition of The Straits Times on September 19, 2016, with the headline 'Japan's top bank eyes S'pore as base to tap Asean's growth needs'. Print Edition | Subscribe