Singapore-based DBS Bank and Nishi-Nippon City Bank (NCB) of Japan have signed a memorandum of understanding (MoU) to foster greater collaboration and support for Japanese small- and medium-sized enterprises (SMEs) in Asia.

The MoU contemplates improved letter of credit (L/C) availability alongside corporate banking account services, trade finance and capital market advisory solutions.

Bank roles

The MoU says both banks will act as primary advising banks for L/Cs issued by each party and offer discounting of export bills. DBS will also issue bank guarantees such as performance and bid bonds on the back of a counter bank guarantee from NCB.

In addition, DBS will provide investment banking and corporate finance advisory services to NCB corporate customers who are seeking to raise funds either through a primary or secondary listing on the Singapore Exchange.

SME growth

Japanese SMEs are the main customers of regional banks like NCB, and they are increasingly export oriented.

A whitepaper published by Japan's SME Agency, revealed that 42.8 per cent of Japan's smaller firms increased their presence in the ASEAN region in 2013, up from 25.5 per cent in 2010.

A December 2015 survey by the Japan Bank for International Co-operation concluded that 75.2 per cent of Japanese SMEs said that they would "strengthen and expand" their overseas business in the medium-term.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.