19 Jul Norinchukin Bank: Australian Project Financing Opportunities
Japan’s Norinchukin Bank plans to open in Australia on 1 August 2017 to explore, at first, project and asset finance opportunities in Australia and New Zealand. This expansion reflects a broader push into international markets for Japanese business lending as well as investment .
The Norinchukin Bank was jointly established in 1923 by the Japanese government and a major Japanese agricultural cooperative which later became known as JA (Japan Agricultural Cooperatives). Today, the Norinchukin is a private financial institution that supports the advancement of Japan’s agricultural, fisheries and forestry industries by providing financial services to its members. These 3,656 members primarily consist of the JA, Japan Fishery Cooperatives (JF) and Japan Forestry Cooperatives (JForest). Members are also the Bank’s shareholders.
These cooperatives pool their resources at a municipal, prefectural and national level and they act on behalf of their members. The cooperatives provide business advisory services alongside banking services, marketing and insurance business. These activities are carried out by the JA, JF and JForest at a municipal level and their respective federations and unions at a prefectural and national level.
Similarly, the “cooperative banking business” is also divided over the three levels of government. The JA and JF operate at the municipal level, the JA Shinnoren (Prefectural Banking Federation of Agricultural Cooperatives) and the JF Shingyoren (Prefectural Banking Federations of Fishery Cooperatives) at the prefectural level and The Norinchukin Bank at the national level.
In 2002, the JA, JA Shinnoren and The Norinchukin Bank established the JA Bank Systemas the main banking system for the agricultural industry. This system is a framework for integrated and systematic cooperation between the business activities of these three entities. The two basic tenets of the bank system are to provide unified banking operations and a secure, reliable banking service.
The Norinchukin Bank is one of Japan’s largest institutional investors with an investment portfolio of more than US$540 billion and assets exceeding US$950 billion. Through its headquarters in Tokyo, it accepts deposits, lends to members and invests both domestically and internationally.
Norinchukin’s establishment of an Australian subsidiary is part of a broader investment drive into international markets. Today, Norinchukin has overseas branches in New York, London and Singapore and Representative offices in Hong Kong and Beijing. This increasingly international investment focus is in part a result of the prolonged low interest rates (even negative) in Japan.
In recent years, Japanese megabanks have dominated large-scale project financing internationally. According to Thomson Reuters the world’s top three providers in 2016 were Japanese mega banks: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group. This is a large shift from 2010, when these banks were ranked 9th, 17th and 21st respectively.