(Bloomberg) -- Sumitomo Mitsui Financial Group Inc. named Toru Nakashima as chief executive officer, turning to an experienced insider to lead Japan’s second-largest bank following the death of his predecessor.
His appointment is effective Dec. 1, the company said in a statement on Thursday. Deputy President Nakashima, 60, has already been serving as interim chief since Jun Ohta died at the age of 65 on Nov. 25. He has long been seen as Ohta’s heir apparent.
Nakashima will face the task of building on a business expansion pursued by his predecessor, who pursued ambitious forays abroad. Under Ohta, Sumitomo Mitsui made acquisitions in Asia, investing billions of dollars as growth opportunities at home dwindled due to the country’s slow economic expansion and bouts of deflation. He also built a stake in Jefferies Financial Group Inc. to boost the lender’s investment banking business in the US.
Sumitomo Mitsui still needs to boost its investment banking business in the US and Europe, Nakashima said at a briefing after the announcement of his role. He also plans to strengthen the lender’s franchise in the four key Asia markets of Indonesia, India, Vietnam and the Philippines, building on Ohta’s groundwork. In Japan, there is also room to boost its domestic corporate banking, he said.
Another task that lies ahead for Nakashima will be to prepare Sumitomo Mitsui for rising interest rates in Japan, as the emergence of inflation prompts the central bank to consider ending its years-long ultra-easy monetary policy. “Scale will come to matter when interest rates start rising,” he said at the briefing. “I am getting more aware of the need to expand our scale.”
Like chiefs at other big Japanese lenders, Nakashima is a life-time company insider, joining the bank’s predecessor in 1986 after graduating from the faculty of engineering at the University of Tokyo.
He was seen as one of the most likely candidates for the top job in recent years when he served as chief financial officer and chief strategy officer at the same time, a dual role Ohta had before he became CEO in 2019.
Ohta reported his health condition in April and was hospitalized in early November, according to Sumitomo Mitsui’s chairman Takeshi Kunibe. Ohta told the board’s nomination committee about his intention to step down on Nov. 21 and passed away four days later from pancreatic cancer. Nakashima had been considered as the successor for a while, Kunibe said.
The new CEO is known as a straight talker like Ohta, as well as a sportsman. While Ohta played American football at college, Nakashima was a rugby player.
“My foundation was built by my rugby experience. It steeled my mental strength,” Nakashima said. “I will do my best to finish what Ohta has started.”
Japanese bank shares have jumped this year amid speculation that the Bank of Japan will soon end its negative interest-rate policy, a move that would help to restore lending profitability. Shares of Sumitomo Mitsui are up 37% in 2023.
The Tokyo-based company is forecasting a record 920 billion yen ($6.3 billion) in net income for the year ending March. Rivals Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are also expecting profit to climb this fiscal year.
(Updates throughout with comments from new CEO Nakashima)
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