January 24, 2013

USD 78 Billion Record Trade Deficit in 2012

Japan posted a record annual trade deficit of JPY 6.927 trillion (USD 78 billion) in 2012, according to Finance Ministry figures released Thursday. The largest gap between exports and imports in history was last recorded in 1980 during the"second oil crisis". The new record deficit is partly due to a sharp rise in the imports of fossil-fuel, particularly liquefied natural gas, for thermal power projects. 

The balance of trade in goods for December, released simultaneously by the ministry, came to JPY 641.5 billion (USD 7.1 billion) in deficit, mainly reflecting weak exports and rising imports.

January 22, 2013

Taiwan's Chinatrust to Buy Tokyo Star Bank

The Nikkei reported that Taiwan's Chinatrust Commercial Bank made an official proposal to acquire Tokyo Star Bank to shareholders for JPY 50 billion (USD 555 million) earlier in the month. Most of the shareholders - including U.S. investment fund Lone Star Funds, Shinsei Bank and France's Credit Agricole SA - are believed to have indicated their support for the bid.

Pending a final agreement with shareholders, the deal will be reviewed by the Financial Services Agency. The FSA will check whether the Taiwanese bank meets necessary ownership conditions under the Banking Act. The deal will make Chinatrust the first foreign bank to acquire a Japanese bank. Previous foreign takeovers of Japanese banks mainly involved investment funds.

Tokyo Star Bank was previously owned by Lone Star, who bought its predecessor Tokyo Sowa Bank in 2001. Loan Star listed the regional bank on Tokyo Stock Exchange in 2005, and subsequently sold its remaining holdings to Advantage Partners. Advantage bought 100% of the bank through take-private TOB in early 2008. In 2011 Advantage was forced to transfer the bank's entire shares to the lender consortium, which included Loan Star and other current shareholders.

Government / BOJ Joint Statement Sets 2% Inflation Target

The Japanese government and the Bank of Japan issued a joint statement to set an inflation target of 2%  today. The central bank also decided to resort to a new method of open-ended monetary easing to pump more money into the economy. The move was largely expected after Prime Minister Shinzo Abe took office last month, but it still denotes a very significant change in the historical relationship between the Government and the BOJ.

The joint statement issued today is binding for both the government and the BOJ. While the BOJ has agreed to try to hit the 2% inflation target as quickly as possible, rather than over the medium to long term, the government has also promised to introduce measures to raise the international competitiveness of Japanese industry and to encourage investment by means of deregulation.

Norinchukin Bank To Support Agri-Corporations

Norinchukin Bank will launch a JPY 100 billion (USD 1.1 billion)  loan program to support large agricultural corporations in this April. The program is aimed at promoting regional development and enhancing the overseas competitiveness of Japanese agricultural products. It is the bank's first such undertaking for the farm sector.

 The farmers' bank will also establish a JPY 5 billion (USD 56 million) fund to invest in about 100 corporations trying to obtain farmland or establish new businesses, providing an average of 50 million yen to each.

The initiative is not very significant given the size of the bank, but it is the first major  attempt to support  agricultural "corporations", to which the bank has traditionally kept some distance in order to favor agricultural "co-operatives" and their member individual farmers.