Chapter 2
The Birth of SMBC and SMFG

1. The birth of Sumitomo Mitsui Banking Corporation

On April 1, 2001, Sumitomo Mitsui Banking Corporation (SMBC) was launched. Akishige Okada became chairman of the board, and Yoshifumi Nishikawa became president. In his inaugural address to officers and employees of the new bank, Nishikawa called for their united and continuous efforts to establish “Sumitomo Mitsui as the most trusted brand.”

On April 8, in the first general managers’ meeting, the new president presented the three key management issues of the new bank: 1) significant improvement of the balance sheet (substantial reduction of non-performing loans outstanding, decrease of cross-shareholdings, enhancement of equity capital); 2) the expansion of gross profit through a business-style transformation; and 3) thorough cost cuts through unconventional approaches.

SMBC was established when Japan’s financial sector was facing challenging conditions. The country’s economic slowdown was prolonged, and the government’s policies aimed at resolving the bad loan problem by urging major banks to duly clear their non-performing loans. In this situation, the new bank embarked on a “voyage on a stormy ocean,” as described by Nishikawa, while harboring a bright future vision.