Two of Japan’s largest regional banks have set their sights on the Southeast Asia region as a location for new offices to support client companies’ expansion into the region. The move will shift resources away from its existing network in London and Hong Kong.
Gunma Bank, headquartered Northwest of Tokyo, plans to open a representative office in Ho Chi Minh City this fiscal year to meet the growing borrower interest in Vietnam. On the other hand, Bank of Yokohama will be closing its representative office in London in November 2020 as it shifts its focus towards its new Singapore office, which opened in August 2020.
These moves come at a time when the Japanese government is encouraging manufacturers to build factories in Southeast Asia in what is widely seen as a push to scale back overdependence on China.
Gunma Bank’s one-person representative office in Vietnam’s commercial capital will “focus on information gathering,” according to the lender, to provide customers back home with knowledge of market conditions and administrative procedures.
The banks reasoning for downgrading its operations in Hong Kong was cited as being a decline in demand. A banking subsidiary is to be liquidated and replaced by a representative office. The Ho Chi Minh City office will be Gunma Bank’s fifth international location and fourth in Asia.
Bank of Yokohama’s move into Singapore reveals a stronger commitment to the Southeast Asia region. Previously, the bank only had a representative office in Bangkok, Thailand. The city-state is home to “a hub of financial functions and companies,” a bank representative said.
Apart from this, the bank’s only other overseas branch is in Shanghai, China. It will rely on Japanese partner Chiba Bank’s London branch to handle operations that had been served by its office in the British capital.
Japan’s new prime minister, Yoshihide Suga, is arranging for the government to subsidies and cover up to half the cost of supply chain investments by Japanese companies within the Association of Southeast Asian Nations bloc. SMEs can expect up to two-thirds of the cost to be subsidised.
Suga has said he favours policies to make Japan’s regional banks more competitive as they struggle with ultralow interest rates and demographic changes that are hollowing out their local economies.