In Japan’s old capital, bank turns to local development in test of Suga’s revival drive
A lender in a suburb of Osaka is investing in local development and setting a growth target because of its home prefecture, supplying a fresh model for how banks could operate under Primary Minister Yoshihide Suga's revitalization travel.
The efforts by Nanto Bank, based in Japan's ancient capital of Nara, arrive as Suga calls for regional banks to boost localized economies reeling from an ageing and dwindling population.
Nara's tourism industry, for example, is struggling to pull money from guests, who typically flock to its World Heritage temples but don't stay overnight. The coronavirus pandemic provides added pain for vendors, with Japan closing its doorways to most foreign tourists.
Being aware of the bank's fate could possibly be tied to Nara's economy, Nanto last year set a great ambitious target to improve the prefecture's gross household product (GDP) by 10% over a decade.
"We asked ourselves whether regional banking institutions would be around ten years from now and concluded that without a vibrant regional economy, we can not stay relevant," Nanto President Takashi Hashimoto advised Reuters.
Helping supercharge tourism infrastructure was a first step, he said: "We want to switch Nara into a destination to stay designed for a night, instead of a location where people just drop by."
Nanto committed to a 1.5-billion-yen ($14 million) fund in projects that rehabilitate historical neighborhoods and turn centuries-old buildings into boutique hotels.
One such case in point is Maruto Shoyu, a good three-centuries-old "shoyu" soy sauce brewery-turned hotel that opened 90 days ago near among Japan's oldest shrines worshipping Mount Miwa.
"This area could be underdeveloped, but I took that as a positive because visitors may enjoy Japan's previous, largely unscathed landscape," explained Maruto's owner, Hiroyuki Kimura.
Prior to the pandemic, Nara was among Japan's most popular holiday destinations and home to well known sites such as the Great Buddha, designed when the region was Japan's capital during the eighth century.
But the prefecture gets the fewest quantity of resort rooms in Japan, and travelers stay static in neighboring big cities. Nanto has worked with local government and firms to create demand on its house turf.
After more than a decade of convincing, JW Marriott opened a hotel in Nara this season, becoming the initially luxury foreign brand to create foot in the prefecture. About 14 more accommodations have opened this season or plan to do so by 2022, prefecture officials say.
Achieving Nanto's GDP aim for, however, won't be convenient with a tourism-reliant economy crippled by the coronavirus pandemic.
Addititionally there is no promise more tourists would generate more revenue. Nanto's expense in the rehabilitation fund can be a drop in the sea compared with total loans to corporate debtors exceeding 5 trillion yen.
Although Nanto holds a 50 % industry share in Nara, it has didn't generate plenty of profits from core lending and cost businesses to offset charges for greater than a decade.
Which means Nanto must accompany expenditure with expense cuts, including locally unpopular branch closures.
"The prime minister is prodding regional banks to become more robust," Nanto's Hashimoto said. "We have been trying to achieve that for some period. We can't help the neighborhood economy unless we stay lean and mean."
