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Japanese bank enters mortgage market

by Steven Cross7 minute read
The Adviser

Competition in the Australian mortgage market has intensified with the announcement that Japan's biggest bank will fund a domestic non-major lender.

After acquiring a 15 per cent stake in AMP Capital in 2011, Bank of Tokyo-Mitsubishi UFJ (BTMU) has strengthened its relationship with AMP by providing a $500 million one-year residential mortgage-backed facility.

In a statement issued in Tokyo, BTMU said the bank will provide short-term funds to AMP to write mortgages. Appetite for residential mortgage-backed securities (RMBSs) has been recovering, data from Thomson Reuters show, with volumes so far this year at US$21.3 billion, twice those for the same period in 2012.

Speculation that Japanese banks have been eyeing the Australian mortgage market has been rife over the past few years. In early 2012,The Adviser reported that as many as four Japanese banks were assessing the Australian market.

Yellow Brick Road’s Mark Bouris told reporters at that time that Japanese banks had the potential to snatch market share away from Australia’s lenders “quite quickly” and could potentially take “5 to 10 per cent of the market”.

According to Mr Bouris, the $62 billion Mitsubishi UFJ Financial Group, $42 billion Sumitomo Mitsui Financial Group and $35 billion Mizuho Financial Group, were rumoured to be considering operating on Australian shores.

In July 2012, Sony Bank revealed its intention to break into the Australian lending market, confirming that the institution planned to open an office in Sydney in late August and begin a feasibility study.

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