Lender offering special 0% interest rate on stock loans to Japanese corporate clients
Euro Credit Holdings Limited is expanding to Japan as an international money lender. The London-based wealth management consultant will mark its entry into the market by offering clients 0% interest on collateralized security loans, better known as stock loans.
Overseeing the expansion into Japan is Rhys J. Aldous, Executive Vice President of the Securities Lending Division. “Commonly in Japan, it is traditional to get money from the bank, but this is becoming difficult for Japanese investors,” he said. “You could go to your broker and receive a reasonable rate for the collateral you put up, but now rates are high, and it is much more challenging for investors to use their securities for financing.”
As the world’s third-largest economy, Japan is a prime market for Euro Credit’s services. The company will target the country’s many shareholders invested in corporations with market caps in the billions of dollars. Euro Credit’s target market will be Japanese corporations, institutions, and corporate investors, as well as retail investors.
The firm is eager to enter the largely untapped market. “In the past, international lenders have not done well when entering the Japanese market,” Mr. Aldous said. “Japanese citizens are very particular about money, and traditionally will only go to a bank for a loan when they need cash for investments. We want to change this sentiment.”
This is a particularly opportune time to enter Japan with these services, Mr. Aldous said, because firms like Euro Credit have the ability to offer 0% interest stock loans, thanks to incentives by the Bank of Japan to encourage foreign lenders to set up shop in Japan.
Stock loans are a handy way for borrowers to gain quick access to liquid assets, buy investments, and purchase real estate. A stock loan is a collateralized loan granted by a bank or lending firm and funded by the lender using shares of stock as the collateral for the loan.
Mr. Aldous expects to find avid interest on the part of Japanese investors in using Euro Credit instead of a local firm. “One good reason for people to use us over a local firm is that currently local firms are offering very low loan-to-value (LTV) rates for all stock loans — as low as 10%-25% LTV” he said. “We can offer 60%-50% LTV and 0% interest.”
“Now is the best time —stock liquidity is relatively low, and people are looking for ways to finance their stocks so they can access some of the capital in the asset. If they sell their stock, they will be charged capital gains tax, but if they take out a loan, it’s tax free and not a reportable event as it’s a personal loan.”
Loans are provided by three types of providers in Japan — large traditional banks, consumer credit companies, often owned by multinational corporations, and international private corporations like Euro Credit. International lenders in total currently account for only 10% of loans in Japan, he said.
“In Japan, people often feel shame when applying for loan, but stock loans do not have that problem. They don’t need a personal guarantee; they are based on the collateral (the stock). They are private and confidential. The shareholder/borrower can be assured that their collateral is safely held in a local custodian bank. The lender does not hold any shares. At all times, the shareholder/borrower remains the official owner of record. The loans we are offering are known as NTT (non-title transfer) stock loans.”
Euro Credit is a premier provider of wealth management and multi-faceted mergers and acquisitions services in all aspects of debt and equity financing, restructuring, valuation, and strategic consulting. Last year, in 2022, the company pre-approved over £2 billion in transactions, with a 98% success rate.
The firm is proudly client-oriented and independent from corporate overseers. Client interaction is focused on value-driven financing engagements where each financing transaction is for the benefit of the client rather than for the entities that structure the transaction.
Euro Credit provides highest value lending and financing services and ensures that its clients are always the priority.
Most importantly, the firm will offer its select clientele peace of mind. Japanese investors are not so different in their goals as in the rest of the world, Mr. Aldous noted. They desire safety and security, in addition to maximizing their return on equity. “Euro Credit works in partnership with local banks and custodians to ensure the safety and security of its clients’ shares,” he said.
Euro Credit Holdings Limited
- 15 St Helen’s Place, London, EC3A 6DQ,
- Phone: +44 203 807 3836
- Email: [email protected]
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