Another Successful Export--Money : Japanese Lending and Investing More Abroad

TOKYO —  The Japanese are busily adding another product to their long list of successful exports--money, billions of dollars of it.

A wave of Japanese cash moved through the banking halls of Frankfurt, London, New York and Zurich, and made 1984 a record-breaking year for Tokyo bankers.

The city’s Marunouchi banking district saw the biggest yen loan ever in 1984 when the Canadian government arranged a borrowing of $490 million in July.

Only a few days before, Australia and New Zealand borrowed $408 million each and New Zealand was back in November for another $100 million.

Record Investment

Economists at the Nomura Research Institute, part of Nomura Securities Co., the country’s largest stockbroking firm, think Japan will have invested a record $44 billion abroad in 1984, more than double 1983’s $18 billion.

And Yoshihisa Kitai, an economist with Japan’s Long Term Credit Bank, thinks the figure will rise to between $45 billion and $50 billion in 1985.

Why are the Japanese sending abroad money they could spend at home?

Medical breakthroughs are helping Japan’s population to live longer and more people than ever before are increasing the money they stash away on investments to cope with approaching old age.

The Japanese are now saving some 18% of their income, compared to the average American’s six%, and the life insurance firms and pension funds are moving it abroad.

Hundreds of firms are sending money away to build factories overseas and placate countries threatening to stop Japanese exports at the docks unless the Japanese make their products where they are sold.

Also, Japanese banks are moving abroad because no one wants their money at home.

The huge loans the banks lent to Japanese companies 10 years to 20 years ago to build steel works, shipyards, car plants and robot factories are all being repaid.

Small Industries

And hardly anyone needs that amount of money now because Japan is turning to small high-technology industries for growth.

So much money is sloshing about in the Japanese money market that the country’s interest rates reward savers with a mere 6% or 7% return.

And all these forces have emerged at a time when American investments offer a far better incentive to savers, despite recent falls in interest rates there.

“The Japanese are investing huge amounts of money in U.S Treasury bills and dollar-based stocks because there is a 5% difference they can enjoy between U.S. and Japanese interest rates,” Takashi Kamijo, a leading merchant banker with Sumitomo Bank, told Reuters.

Bankers expect another record to fall when the Finance Ministry announces Japan’s latest monthly overseas investment in foreign securities in January. They appear to have bought more than $4 billion worth in November alone, more than October’s record $3.6 billion.

Katsuya Takanashi, a manager of Nomura Securities international finance department, said: “Japanese investors are now very important, perhaps the most important group of investors in international markets.”

This flood of money has helped Japan’s banks become a major force in the world financial scene. There are some 70 alone with branch offices in London, all competing to lend their money.

Small Loans Spurned

Yet, at home in the past, they have lent precious little to the average man in the street.

Until recently there were plenty of Japanese companies setting out on the export road who wanted what money there was available in Japan. Small consumer loans were spurned.

Noburo Makino, now chairman of the Mitsubishi Research Institute, recalls the days of his youth when he had to go with scraping bows, begging bank managers for a loan.

But now the tables are turning and Japan’s banks are having to scramble into the business of lending money to smaller customers.

Makino beams as he describes the life of his banker son trying to lend money.

“He has to bicycle around Tokyo these days, trying to find someone who wants it.”