SMBC uses OakNorth’s credit intelligence software to grow lending
The large Japanese lender joins PNC in taking the loan underwriting and monitoring system developed by a new lender to UK SMEs and tested through Covid.
With a balance sheet over $2 trillion, Sumitomo Mitsui Banking Corp is one of the world’s biggest commercial lenders, usually ranking between 12 and 14 among the world’s largest banks, close to Citigroup and Wells Fargo.
It has ambitions to grow again outside its home market, targeting Asia, particularly Indonesia, the Philippines, Vietnam and India, as well as the US.
In March, it paid $384 million for 4.9% of Ares, a large non-bank lender that finances mid-sized US companies. In May, SMBC announced its aim to grow share in US investment-grade bond underwriting and to climb from its present spot at 15 in the league tables into the top 10.
However, this looks like a bad time to expand lending in overseas markets.
Even a determined fiscal and monetary policy response and good news on vaccines still leaves open the possibility of permanent damage to many sectors and businesses, more defaults to come and likely lower recovery rates.
There was no model for such a sudden and complete disruption
Lenders keen to grow always face the risk of negative selection: that they will win all the new customers that the local banks – who know the territory much better – won’t lend to.