TOKYO: The Japan Bank of International Cooperation and Sumitomo Mitsui Banking Corp. will make it easier for smaller domestic lenders to finance power infrastructure projects in Asia, as Japan looks to boost infrastructure exports and hopes to make efficient use of regional funds. The regional banks will be able to take part in the financing through a trust account of JBIC’s loans established by SMBC, part of Sumitomo Mitsui Financial Group. Having JBIC as the direct lender to infrastructure businesses reduces risks for smaller regional banks, as JBIC is responsible for capital recovery, and loan periods are shorter. Typically such projects span more than 10 years.
JBIC will use the new framework to finance power plant construction and operations in Asia. Iyo Bank, Gunma Bank and Chiba Bank will be the first participants. Infrastructure exports are a core part of Japan’s economic growth strategy. As the Bank of Japan’s negative rate policy pushes down interest rates, financing infrastructure projects abroad can help the banks earn stable incomes. JBIC plans to continue cooperating with regional banks to help Japanese corporations finance their infrastructure exports.
