TOKYO: The Japanese government will give trade insurance coverage to loans extended by Japanese banks to Saudi Arabia’s government, officials confirmed Tuesday.

The measure was confirmed in a videoconference between Japanese trade minister Hiroshi Kajiyama and Saudi Minister of Investment Khalid Al-Falih.

Trade insurance covers risks involved in international transactions such as exports and overseas investments.

Tokyo is considering having government-held Nippon Export Investment Insurance, or NEXI, provide full protection against any losses on loans that Japanese banks extend to the Saudi Finance Ministry.

The three megabank lenders of MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank are among those expected to provide the insured loans to Saudi Arabia.

The move is designed to financially support Saudi Arabia, which is trying to reduce its dependence on oil and diversify its funding sources.

Japanese banks, for their part, will be able to reduce risks in extending loans to the Middle East country.

“The two countries’ cooperation will be accelerated through loans,” Kajiyama said.

Also on Tuesday, the two ministers agreed on bilateral cooperation to make it easier for companies of both nations to start business in each other’s markets.

Japan and Saudi Arabia work together in nine fields, such as energy plus investment and finance, from 2017.

JIJI Press