Japan's big banks begin looking for new, riskier business

Japan's major banks, the biggest in the world, are trying to boost profits from their American operations by recruiting American bankers and breaking into new, and possibly riskier, lending areas, Japanese bankers say. Up to now, the Japanese institutions, including Dai-Ichi Kangyo Bank, Sumitomo Bank, and Mitsubishi Bank, have foregone big earnings in an effort to establish a foothold in the market and gain name recognition in the United States.

``We used to do any business that was available, but that era is over. Profit performance is now most important,'' said an official with a large Japanese bank in New York who asked not to be identified.

The bottom-line pressures on Japanese banks are similar to those affecting their American rivals. Big corporations are issuing more commercial paper and doing less business with banks, and profit margins have been squeezed because of high interest rates.

``It's time to get into new areas,'' a deputy branch manager at another Japanese bank told Reuters.

He and other Japanese bankers said they are considering more high-yield, high-risk lending operations, such as lending money to less creditworthy clients at higher interest rates, and financing leveraged buyouts.

Wall Street analysts, however, said they do not expect Japanese banks to dramatically shift their course.

``The Japanese are relatively risk-averse,'' said Stephen Berman, an analyst with Country Securities in New York. The Japanese are more likely to continue competing with the US money-center banks for big corporate clients, Berman said.