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Japan’s three mega-banks are in discussions with Saudi Arabian Oil Co (Saudi Aramco) over an expanded lending and financial technology sharing agreement that is expected to be signed on Thursday afternoon in Tokyo.

The discussions, confirmed by people close to the talks, are part of a major push by Japan’s financial titans to negotiate themselves closer to the state-owned and world’s largest oil exporter and use that as a springboard for closer involvement in its planned IPO, writes Leo Lewis in Tokyo.

Mizuho, one of the three banks, said it had signed a memorandum of understanding ” for business cooperation…with an aim to support Japanese companies investing in the Kingdom of Saudi Arabia”, without mentioning fintech.

People close to the three banks, which also include Mitsubishi UFJ and Sumitomo Mitsui Financial Group, said that the agreement was part of an accelerated effort to woo major overseas customers as lending growth to big domestic corporations slows.

Japanese banks have been hit by the Bank of Japan’s decision in January to impose a negative interest rate policy and concerns over the rising cost of US dollar funding.

The Aramco agreement, which would be non-binding, is expected to be signed by top executives of the three banks and senior Aramco executives currently in Tokyo. The agreement coincides with the visit to Tokyo this week of Saudi Deputy Crown Prince, Mohammed bin Salman. The three banks declined to comment on the progress of talks.

With stock exchanges and investment banks around the world eyeing the Aramco IPO and what would be the biggest flotation in history, Japan will take the opportunity of the Crown Prince’s visit to propose that Aramco list its shares on the Tokyo Stock Exchange.

Copyright The Financial Times Limited 2017. All rights reserved.
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