| 23.01,12. 03:49 AM |
Japan's raid on loans
January 23, 2012
JAPANESE banks could snatch $100 billion of the Australian home loan market by undercutting local lenders which fail to pass on rate cuts.
At least three big banks, the $62 billion Mitsubishi UFJ Financial Group, $42 billion Sumitomo Mitsui Financial Group and $35 billion Mizuho Financial Group, are said to be considering operating here.
The arrival of the Asian giants would be good news for homeowners, with the big four banks hinting they won't pass on an expected 0.25 percentage point rate cut in early February and others likely to follow, blaming rising costs of funds in world debt markets spooked by eurozone woes.
Finding funding is less of a problem for Japanese lenders because they have mountains of inexpensive deposits at the ready courtesy of their country's savings culture.
"The Japanese banks could take 5 to 10 per cent market share away from the Australian banks quite quickly," said Mark Bouris, head of non-bank lender Yellow Brick Road and a member of Treasurer Wayne Swan's Financial Sector Advisory Council. "It is what our marketplace needs."
To get 10 per cent of the local mortgage market, the Japanese would need to write more than $100 billion worth of home loans as the domestic mortgage sector totals $1.06 trillion, according to latest Australian Prudential Regulatory Authority data.
A new report by Deloitte Access Economics, one of the nation's top teams of economic analysts, nominates the well-resourced Japanese banks as the most significant threat to Australia's finance giants after Europe's debt mess.
"With the eurozone crisis also haunting the horizon and rumours of Japanese competition in mortgage markets, 2012 may be a tough year for the finance sector," its Business Outlook report, published today, warns.
Our mortgage market "ticks all the boxes" for Japanese banks, said Mr Bouris, who with Aussie Home Loan's John Symond spearheaded the last significant competitive challenge to the big banks.
Australia offers stability, growth, diversification and healthy returns, with lending margins of about 2.5 per cent.
"That level of yield is unbelievably good for Japanese banks," Mr Bouris said. "It's quite a compelling argument why they would look at the Australian mortgage market."
Japanese banks could set up mainly online operations like ING, wholesale to the likes of Mr Bouris's Yellow Brick Road or use a broker such as Aussie.