The story
SMBC was formed by the merger of the Sumitomo Bank and Sakura Bank in April 2001. Its history could be viewed as going back to 1683, the date of first documented banking operations by Mitsui Takatoshi. The group's two main historical components, Mitsui Bank and Sumitomo Bank, were established as modern private banks in the Meiji era, in 1875 and 1895 respectively. SMBC Group also incorporates several of the National Banks in Meiji Japan which were numbered in accordance with their chronological date of establishment until 1880:
the 5th National Bank, est. 1875 in Osaka, formed by former Samurai from the Satsuma Domain and merchants from Northern Kyushu, later relocated to Tokyo and merged 1898 into the 32nd Bank (see below);
the 15th National Bank, est. 1877 in Tokyo, reorganized 1897 as Fifteenth (Jugo) Bank, collapsed 1927 in that year's financial crisis, eventually merged 1944 into Teikoku Bank;
the 32nd National Bank, est. 1878 in Osaka, merged 1920 into the Fifteenth Bank;
the 38th National Bank, est. 1878 in Himeji, merged 1936 with several other local banks to form the Bank of Kobe, itself merged 1973 with Taiyo Bank to form Taiyo Kobe Bank;
the 51st National Bank, est. 1878 in Kishiwada, merged 1940 with several other banks to form Hannan Bank, itself merged 1945 into Sumitomo Bank;
the 55th National Bank, est. 1878 in Izushi, merged 1928 with Tajima Bank, which itself was absorbed by the Bank of Kobe in 1945;
the 56th National Bank, est. 1878 in Akashi, later Goroku Bank, another participant in the merger that formed the Bank of Kobe in 1936;
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the 61st National Bank, est. 1878 in Kurume, acquired 1912 by Sumitomo Bank;
the 65th National Bank, est. 1878 in Tottori, acquired 1928 by Kobe Okazaki Bank (est. 1917) which was another of the banks that formed the Bank of Kobe in 1936;
the 94th National Bank, est. 1878 in Tatsuno, absorbed 1917 by the 38th Bank;
the 106th National Bank, est. 1878 in Saga, acquired 1941 by Sumitomo Bank;
the 131st National Bank, est. 1879 in Kasukabe then relocated to Kano, merged 1881 into the 32nd National Bank;
the 137th National Bank, est. 1879 in Sasayama, split 1942 into two banks, one of which was absorbed by the Bank of Kobe;
the 142nd National Bank, est. 1879 in Chōshi, merged 1881 into the 32nd National Bank.
At the time of the merger, the combined entity was of similar size to Deutsche Bank and to the pending merger that would soon form Mizuho Bank.
Early years
The newly created bank was plagued with bad assets from the Japanese banking crisis. This led to several corporate actions taken by SMBC to clean up its balance sheet and raise capital, including writing off non-performing loans and selling its stake in Goldman Sachs.
SMBC announced on July 30, 2002 that it would establish a holding company by December and reorganize three related companies, its subsidiary Sumitomo Mitsui Card Company, Sumitomo Mitsui Bank Leasing, and The Japan Research Institute, a sister think tank, as subsidiaries of the holding company. The holding company had a capital of 1 trillion yen, and SMBC CEO Takashi Nishikawa and Chairman Akira Okada each served as president and chairman of the holding company.
In July 2002, SMBC announced that it would repay 2,000 billion yen of public funds, which had been accepted in the form of perpetual subordinated bonds. The funds were part of a total of 1.5 trillion yen that had been injected into the Japanese banking system following the financial crisis of the late 1990s. In 2005, SMBC announced a three-year repayment plan, and in October of that year, it repaid an additional 323.6 billion yen. SMFG initially targeted repaying all of its public funds by the end of the 2006 fiscal year. Mitsubishi UFJ Financial Group (MUFG) and Mizuho Financial Group (MHFG) also had the same goal. These moves were due to a number of factors, including the active resolution of non-performing loans, which had stabilized the financial system, and the increased repayment capacity of the banks. The Financial Services Agency had also encouraged banks to repay their funds early, and some banks, which were reluctant to have their management interfered with by the authorities, had responded.
In December 2002, SMBC began considering a takeover of the Aozora Bank, which was established after the collapse of the former The Nippon Credit Bank. The Aozora Bank President Hiroshi Maruyama expressed reservations about the proposal, as it would have made it difficult for the bank to go public and repay public funds from the proceeds of the IPO. SMBC competed with a joint venture between the US investment firm Cerberus and the German bank HypoVereinsbank, and the US financial company GE Capital. The offer price was about 100 billion yen, and Cerberus also offered the same amount. However, Cerberus, as a major shareholder of Aozora Bank with a 12% stake, had the right to purchase the bank first if the offer price was the same as that of the other bidders. In April 2003, Cerberus announced the acquisition of the Aozora Bank.
In March 2003, SMBC initiated a reverse merger with its subsidiary, Wakashio Bank (est. June 1996), to secure financial resources to cover large deferred losses from its equity holdings. Although SMBC was technically dissolved and Wakashio Bank became a company that survived, under the Japanese Commercial Code, the surviving entity took the name Sumitomo Mitsui Banking Corp., just like the disbanded bank name. SMBC President Yoshifumi Nishikawa and chairman Akishige Okada became president and Chairman of the new entity respectively. Hiroyasu Ichikawa, President of Wakashio Bank, assumed the position of senior managing director. The purpose of the merger was to generate about 2 trillion yen in book profits (merger surplus) by making the Wakashio Bank the surviving company, and to eliminate the hidden losses of SMBC, such as those on stocks. The profit, then, was used to accelerate write-offs of the bank's unrealized securities losses and boost sales of its shareholdings to reduce risk from the fluctuation of stock prices. Post the merger, the new entity grew rapidly through organic and inorganic growth strategy. The assets expanded from 102.4 trillion yen in 2003 to more than 200 trillion yen by the end of 2019, making it the 12th largest bank in the world.
On July 14, 2004, UFJ Holdings announced that it had decided to enter into negotiations with Mitsubishi Tokyo Financial Group (MTFG) for a management integration. In response, on July 30, SMFG announced that it had made a management integration proposal to UFJ. On August 8, it was reported that SMFG had sent a formal proposal document summarizing the detailed terms of the integration plan to MTFG. In response to MTFG's plan to provide an investment of approximately 500 billion yen, SMFG said that it would invest at least 500 billion yen and up to 700 billion yen. SMFG proposed a merger ratio of "1 to 1." The recent stock prices of SMFG and UFJ were 1 to 0.77 on average over the past six months, which was an exceptionally favorable condition for UFJ shareholders. However, in February 2005, MTFG and UFJ signed a merger agreement with a merger ratio of "1 to 0.62." SMFG officially decided to withdraw its management integration proposal to UFJ and notified UFJ in writing. On January 1, 2006, MTFG and UFJ Holdings merged to form Mitsubishi UFJ Financial Group. While SMBC eventually lost the contest, it was credited with increasing competition within Japan's once staid banking industry.
In February 2005, it was revealed that SMFG was in negotiations with Daiwa Securities Group, with a view to a possible merger of the two companies. The two groups had already established a joint venture, Daiwa Securities SMBC, a specialist in corporate transactions, but they were considering merging their holding companies to achieve a complete integration of the groups as a whole. They hoped to achieve this as early as the 2005 fiscal year. However, on April 8, Daiwa Securities Group Holdings President Shigeharu Suzuki said, "There are no benefits to a merger at this time, and we have no plans to begin negotiations with Sumitomo Mitsui Financial Group."
In September 2006, SMFG acquired SMBC Friend Securities, which was a majority-owned subsidiary of SMBC with a 40% stake.
SMFG announced on October 17, 2006, that it had repaid all of its public funds. MUFG repaid the funds it had inherited from its predecessor, UFJ Bank, in June. MHFG repaid its public funds in July, which had once approached 3 trillion yen. SMFG had initially targeted repaying its public funds by the end of the fiscal year, but it moved up the repayment schedule out of concern that it would be "half a lap behind" the other megabanks.
In December 2006, SMFG announced that it would consolidate its headquarters functions in the Ōtemachi district of Tokyo. Since the merger in 2001, SMFG had its head office in the former Mitsui Bank building in Hibiya, with some headquarters functions in Marunouchi. The new headquarters is located next to the former Sumitomo Bank building, and the move was completed in October 2010. SMFG President Masayuki Oku said, "By consolidating our headquarters, we can improve efficiency and realize advanced and fast-paced operations."
Subsequent development
On April 27, 2007, SMFG and Mitsui & Co. announced that they would invest a total of ¥400 billion in Central Finance Co., Ltd, a credit card company affiliated with MUFG Group. SMFG would effectively own 20% of CF, giving it a controlling stake. This move was seen as an effort by SMFG to strengthen its credit card business, which was lagging behind those of other megabanks. The move was initiated by CF last summer, without the knowledge of MUFG. Central Finance had been in talks with SMFG since then. Meanwhile, MUFG had been trying to merge CF with its close credit card company, Jaccs. However, CF President Tatsuo Tsutikawa and other executives opposed MUFG's plan. "It was not an option for us to stay with MUFG," Tsutikawa said. "Our unique characteristics would not have been allowed to flourish." At that time, CF was also considering a merger with Quoq Card, a credit card company in the SMFG.
In July 2007, SMBC acquired a portion of the shares of Daiei's credit card subsidiary, OMC Card, from the struggling retailer for ¥74.8 billion. SMBC then became OMC Card's parent company. With the addition of OMC Card to its existing subsidiaries, Sumitomo Mitsui Card and Central Finance, SMBC's total cardholder base exceeded 40 million, surpassing its rival, Mitsubishi UFJ NICOS (37 million). SMBC President Masayuki Oku said, "We want to build a group that balances the strengths of banks, credit card companies, and retail card companies."
In July 2008, SMBC Group bought a 2.1 percent stake in Barclays Bank for £500m.
Since 2008, the Singapore branch has become SMBC's regional hub in Asia Pacific while global headquarters is still maintained in Tokyo, Japan.
In February 2009, Citigroup, a US financial company in the midst of a restructuring, announced its intention to sell its Japanese subsidiary, Nikko Cordial Securities, a retail brokerage firm. SMFG, along with MUFG and MHFG, expressed its intention to buy the company. In the final round of bidding on April 20, SMFG submitted the highest bid. On May 2, SMFG officially announced the acquisition of Nikko Cordial Securities and the major businesses of Nikko Citigroup Securities for ¥545 billion. In October 2009, SMBC purchased all of the operations of Nikko Cordial Securities and certain businesses of Nikko Citigroup, such as the domestic stock and bond underwriting business among others, before reorganizing them into a new subsidiary company, SMBC Nikko Securities Inc., in April 2011. SMBC Nikko Securities becomes investment banking arm of SMBC group and offers equity and debt financing, trading, and merger and acquisition advisory services worldwide with the main base in Japan.
In April 2009, SMFG began considering a preliminary merger of its corporate brokerage business with Daiwa Securities Group, as part of a comprehensive partnership. The corporate brokerage firm Daiwa Securities SMBC, in which SMFG owns 40% and Daiwa owns 60%, was to be merged with part of Nikko Citigroup Securities, with SMFG increasing its stake in the new entity. On May 12, 2009, Daiwa Securities Group President Shigeharu Suzuki said, "a merger of Daiwa Securities SMBC and the major departments of Nikko Citigroup Securities was natural given the two companies' competition." He also said, "a full-scale merger of Daiwa Securities (a retail brokerage firm) and Nikko Cordial Securities was not in the cards." However, the full-scale negotiations that began in mid-July dragged on longer than expected. SMFG wanted to increase its stake in Daiwa SMBC from 40% to over 50%, but Daiwa was reluctant. On September 10, 2009, SMFG and Daiwa Securities Group announced that they would dissolve the joint venture for Daiwa Securities SMBC. Daiwa would buy all of the SMFG-owned shares, which represented 40% of the total, for ¥173.9 billion. Daiwa Securities SMBC would be renamed Daiwa Securities Capital Markets and become a wholly owned subsidiary of Daiwa.
The bank steadily increased its tier 1 capital ratios from 12.19% in 2014 to 16.69% as reported in March 2018. Standard & Poor's, Moody's and Fitch Ratings assigned SMBC's an A1, A and A rating respectively (as at March 2018).
In March 2015, SMBC Group bought HK$6.58 billion (JP¥105 billion, US$849 million) of new Bank of East Asia shares, raising SMBC's stake in the Hong Kong lender to 17.5% from 9.7%. In January 2019, SMBC Indonesia merged with PT Bank Tabungan Pensiunan Nasional Tbk, also known as Bank BTPN. The group owned 96.89% ownership of the bank since the merger was completed on 1 February 2019, with Bank BTPN as the surviving brand. Indonesian authorities approved the merger in December 2018, while Japanese authorities approved the merger a month later.
In April 2016, Sumitomo Mitsui Finance and Leasing completed the acquisition of General Electric Group's Japan-based leasing business.
In January 2019, Sumitomo Mitsui Banking Corporation (SMBC) raised its stake in PT Bank Tabungan Pensiunan Negara Tbk (BTPN) to 96.9 percent, increasing its position from its previous 39.92% stake at IDR4,282 per share. Bank BTPN focuses on serving the mass market segment consisting of pensioners, micro, small and medium enterprises (MSMEs), productive poor communities; consuming class segment; and the corporate segment in Indonesia. Post acquisition, the entity was merged with SMBC's subsidiary in Indonesia. In a summary of the proposed merger of BTPN and Bank Sumitomo Indonesia, the total assets and total equity of the merged bank reached a total IDR 178 trillion and IDR 26.92 trillion respectively, using financial position as of 31 May 2018. Upon the merger, BTPN became the 8th largest bank in Indonesia by total assets. In August 2024, BTPN changed its name to PT Bank SMBC Indonesia Tbk.
In March 2020, SMBC Group agreed to buy a 4.9 percent stake in Ares Management. As part of this agreement, the group will make a US$384 million equity investment into the firm.
In April 2023, SMBC announced a plan to triple its stake in US investment bank Jefferies Financial Group bringing total ownership to as much as 15%. It was part of a broader collaboration between the two companies that would allow SMBC to take on larger rivals while advising and lending to investment-grade companies globally, in addition to working in leveraged finance and mergers and acquisitions.
In August 2024, it was reported that SMBC Group was in the race with Emirates NBD to acquire a majority stake in Yes Bank.
From Wikipedia’s article on SMBC Group, shared under CC BY-SA 4.0.7