Mizuho Group head reassures chaebol leaders

Yasuhiro Sato, chairman of Mizuho Financial Group, met with Samsung Electronics Vice Chairman Lee Jae-yong and SK Chairman Chey Tae-won last month to ensure financing for Korean companies would not be interrupted as tensions continue to mount between Japan and Korea.

According to industry sources, the chairman of Japan’s third-largest banking group by assets visited Korea last month and told Chey and Lee that Japanese export restrictions will not affect Japanese banks’ lending to Korean conglomerates.

“Chairman Sato told them not to worry,” said a source in the financial sector. “Korean companies can take advantage of the lower interest rates on loans provided by Japanese banks and, conversely, Japanese lenders can also benefit from having ties with countries like Korea that has a high growth potential and credibility.”

The source said the financial group that owns Mizuho Bank is even considering increasing the size of corporate financing available for local corporations.

“Mizuho Financial Group has issued loans worth around 10 trillion won ($8.2 billion) and they are considering growing the size,” the source said.

As tensions continue to rise over Japan’s economic retaliation against Korea, investors and analysts have warned that the finance sector could soon be affected through potential pressure on investment rollovers or withdrawing loans.

The chairman’s visit is seen as an attempt to ease such concerns, as reflected in his speech on July 19 at a meeting of the Japan Business Federation, Japan’s biggest business lobby.

“If a tension between the two countries lasts long, trust will be ruined and it will take significant time to restore it,” he is quoted as saying by Japanese media. “The business circle from both countries is making its best efforts through private discussions.”

Mizuho Bank is the largest foreign lender for Korean companies.

The bank’s total outstanding loans stood at 11.7 trillion won as of May by increasing over 10 percent since March, according to Financial Supervisory Service data released upon the request of Rep. Kim Jung-hoon of the opposition Liberty Korea Party.

The lending size marks the highest among 38 foreign banks from 16 different countries.

The banks’ credit offerings, such as guarantees of corporate bonds, remain crucial for Samsung Electronics.

Concerned about any potential movement in the finance sector, Lee reportedly met with high-ranking officials at Japanese banks when he visited the country last year to secure key parts for the tech company.

Sato’s stance goes hand in hand with the chiefs of Korea’s financial regulators, who played down the follow-up effects to the financial segment.

The combined loans from four largest Japanese banking groups - Mizuho Bank, Mitsubishi UFJ Financial Group (MUFJ), Sumitomo Mitsui Banking Corporation and Yamaguchi Bank - dipped 7.2 percent from 19.7 trillion won in March, 2018, to 18.3 trillion won this March, according to the latest data from the Financial Supervisory Service.

But when counting loans from all Japanese banks operating in Korea, the figure increased to 24.7 trillion won in May, up 2.8 trillion won compared to March.

“Financing from Japanese lenders doesn’t take up a big portion in the domestic markets, but we are closely monitoring market conditions to take any necessary measures when needed,” said Lee Se-hoon, head of the financial policy division at the Financial Services Commission.

BY HAN AE-RAN [park.eunjee@joongang.co.kr]