4. Challenges facing our global banking business

SMBC generally took two different approaches in the global business, differentiated by geographical area: one for Asia and the other for the United States, Europe and other regions. In Asia, where the nature of markets largely varied by country, offices were opened in each country to independently engage only in its local operations. In contrast, for the United States and Europe, where economic integration had substantially progressed, the Americas Division and the Europe, Middle East and Africa (EMEA) Division were set up, under each of which functions were organized by customer and product category and the divisions were responsible for the entire region. The consolidation of overseas office networks was completed in 2001 in two steps, first in regions excluding China on April 2, then in China on July 2. As a result, the number of offices outside of Japan decreased by 12 to 21 after the merger of the banks from the previous combined total of 33.

In its earliest days, the International Banking Unit was faced by a challenging business environment while striving to significantly reduce risk weighted assets according to rehabilitation plans. In this context, while working hard to remain profitable, the International Banking Unit was downsized. Also, overseas operations diminished to help create an effective integration as early as possible.

In March 2003, SMBC established Sumitomo Mitsui Banking Corporation Europe Limited in London and started operations there. The creation of the new entity entailed costs. On the other hand, taking advantage of serving the single, highly integrated market created by the European Union (EU), SMBC expanded its office networks as well as promoting efficient and consistent operations across the region.