Japan’s second-largest lender Sumitomo Mitsui Financial Group Inc is eager to buy a commercial bank in Indonesia, its chief executive said, after a “painful” defeat last year in vying for mid-sized lender PT Bank Permata.
The comment by CEO Jun Ohta comes as Japanese banks have been struggling with ultra-low interest rates at home, with SMFG seeking opportunities outside Japan, particularly in Southeast Asia.
Speaking with Reuters, Ohta said there would be no significant changes in his strategy in Asia even after the COVID-19 outbreak, as he still expects the region to show stronger economic growth.
Indonesia, where SMFG last year completed the purchase of PT Bank Tabungan Pensiunan Nasional Tbk, is a key market for the Japanese lender.
However, it lost out late last year to Thailand’s Bangkok Bank in bidding for Permata, which had a strong client base of small-to-mid-sized enterprises and middle-income retail customers.
“That was painful. I thought we could win,” said Ohta, adding that the lender couldn’t agree on a purchase price. “We will consider the next target if there is something like Permata, as our banking platform in Indonesia is incomplete.”
SMFG will also look to expands its business in markets including the Philippines, Vietnam and India, he said.
The Japanese financial group has less flexibility in its merger and acquisition (M&A) strategy in the United States, as its banking arm was ordered last year by the U.S. Federal Reserve to improve measures against money laundering.
That put a limit on its M&A activity, and it’s still unclear when the restriction will be lifted.
“I’m considering something that could complement (the brokerage arm) SMBC Nikko Securities to strengthen business such as equity capital markets, although we cannot do it right now,” said Ohta.