Sumitomo Mitsui CEO to Weigh More Acquisition Targets

(Bloomberg) -- After spending more than $3.3 billion on deals in Asia this year, Sumitomo Mitsui Financial Group Inc. Chief Executive Officer Jun Ohta said he’s far from completing his ambitions in the region and will weigh more transactions in the future. 

“We will consider if there are good targets,” he said in an interview. “Our ultimate goal is to create a second and third SMBC Group. We just lack everything,” he added, using its preferred name for the banking conglomerate. 

The boss of Japan’s second-largest lender is seeking to broaden services across Asia, acquiring commercial banks and consumer-finance companies with a focus on four countries: Indonesia, India, Vietnam and the Philippines. Faced with weak growth prospects at home, Japan’s top banks are building on footholds overseas. 

In the U.S., Ohta said Sumitomo Mitsui’s strategic alliance with Jefferies Financial Group Inc. that began earlier this year has already generated some deals. His firm wants to raise its stake in Jefferies above 5% in the future, subject to a written agreement with the Federal Reserve Bank of New York, he said. Ohta’s also interested in American retail banking and said he may consider entering online lending in the U.S. as a way to secure a position in that market.

Ohta’s Sumitomo Mitsui has made a string of acquisitions and strategic investments in Asia this year. 

Acquisitive Year 

In April, the bank said it would buy a 49% stake in Vietnamese consumer lender FE Credit for about 150 billion yen ($1.3 billion), followed by the announcement in July to acquire a 74.9% stake in Fullerton India Credit Co. for about $2 billion. Sumitomo Mitsui also took a 4.99% stake in Rizal Commercial Banking Corp. of the Philippines for about 10 billion yen. 

Ohta says the bank’s plan is to capture demand for specific financial services at each stage of economic development in the region, starting with small consumer finance such as loans for motorcycle purchases. Eventually, the bank hopes to expand businesses that thrive in more mature economies, like investment banking, he said.

Despite his efforts to build up its Asia business and increase shareholder returns, the bank’s stock price remains too cheap, Ohta said. “It’s a shame,” he said, pointing out the company’s price-to-book ratio of about 0.43. “It’s frustrating. We want to do something about this but we have not been successful yet.”

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