Sumitomo puts a brake on loans

Sumitomo Mitsui Financial, the Japanese lender that pumped billions of dollars into Barclays' summer fundraiser, is cutting back on loans to overseas companies as falling domestic equity prices erode its capital base.

"Overseas lending rose at a fast pace in the first half, but that will naturally be more restrained in the second half. Our capital leeway has declined," said Yoshinori Kawamura, Sumitomo's global head of international banking.

Sumitomo said yesterday that it plans to sell preferred securities to boost capital. The bank is likely to raise as much as 400 billion yen (£2.79 billion).

It lifted its overseas lending balance by 27% to 10.2 trillion yen in the six months to September. Japan's three biggest lenders have cut their combined profit forecasts by 61% to 650 billion yen. Their net income fell 64% to a combined 269.9 billion yen for the first half.