In Japan's old capital, bank turns to local development in test of Suga's revival drive
09/12/2020 04:12
By Leika Kihara and Takahiko Wada
TOKYO, Dec 9 (Reuters) - A bank in a suburb of Osaka is
investing in local development and setting a growth target for
its home prefecture, offering a new model for how banks could
operate under Prime Minister Yoshihide Suga's revitalization
drive.
The efforts by Nanto Bank, based in Japan's ancient capital
of Nara, come as Suga calls for regional banks to boost local
economies reeling from an ageing and dwindling population.
Nara's tourism industry, for instance, is struggling to draw
money from visitors, who typically flock to its World Heritage
temples but don't stay overnight. The coronavirus pandemic has
added pain for retailers, with Japan closing its doors to most
foreign tourists.
Knowing the bank's fate could be tied to Nara's economy,
Nanto last year set an ambitious target to boost the
prefecture's gross domestic product (GDP) by 10% over a decade.
"We asked ourselves whether regional banks would be around a
decade from now and concluded that without a vibrant regional
economy, we can't stay relevant," Nanto President Takashi
Hashimoto told Reuters.
Helping boost tourism infrastructure was a first step, he
said: "We want to turn Nara into a place to stay for a night,
rather than a place where people just stop by."
Nanto invested in a 1.5-billion-yen ($14 million) fund in
projects that rehabilitate ancient neighborhoods and turn
centuries-old buildings into boutique hotels.
One such example is Maruto Shoyu, a three-centuries-old
"shoyu" soy sauce brewery-turned hotel that opened three months
ago near one of Japan's oldest shrines worshipping Mount Miwa.
"This area may be underdeveloped, but I took that as a
positive because visitors can enjoy Japan's old, largely
unscathed landscape," said Maruto's owner, Hiroyuki Kimura.
Before the pandemic, Nara was one of Japan's most popular
tourist destinations and home to renowned sites such as the
Great Buddha, built when the area was Japan's capital during the
eighth century.
But the prefecture has the fewest number of hotel rooms in
Japan, and tourists stay in neighboring big cities. Nanto has
worked with local government and firms to create demand on its
home turf.
After more than a decade of convincing, JW Marriott opened a
hotel in Nara this year, becoming the first luxury foreign brand
to set foot in the prefecture. About 14 more hotels have opened
this year or plan to do so by 2022, prefecture officials say.
Achieving Nanto's GDP target, however, won't be easy with a
tourism-reliant economy crippled by the coronavirus pandemic.
There is also no guarantee more tourists would bring in more
revenue. Nanto's investment in the rehabilitation fund is a drop
in the ocean compared with total loans to corporate borrowers
exceeding 5 trillion yen.
Although Nanto holds a 50% market share in Nara, it has
failed to generate enough profits from core lending and fee
businesses to offset costs for more than a decade.
That means Nanto must accompany investment with cost cuts,
including locally unpopular branch closures.
"The prime minister is prodding regional banks to become
stronger," Nanto's Hashimoto said. "We've been trying to do that
for some time. We can't help the local economy unless we stay
lean and mean."
($1 = 104.0200 yen)
(Reporting by Leika Kihara and Takahiko Wada. Editing by Gerry
Doyle)
((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))