Japan’s Largest Bank Mitsubishi UFJ to Unlock Lending for Defense Industry

Separate Lending Standards Set, Wider Coverage
Accelerating Alongside Shift in Japan’s Defense Policy

Mitsubishi UFJ Bank, the largest bank in Japan, is set to significantly expand lending to companies in the defense industry. Following the postwar Peace Constitution and a policy of exclusive self-defense, Japan is now accelerating its shift in security policy by not only increasing defense spending but also bringing in private finance.

On September 17, the Nihon Keizai Shimbun (Nikkei) reported that Mitsubishi UFJ Bank will soon establish separate lending standards for defense-related companies. This is the first time Mitsubishi UFJ is setting such standards for defense lending.

Until now, Mitsubishi UFJ had provided financing to large corporations producing defense equipment, such as Mitsubishi Heavy Industries, but limited such loans to general operating funds not directly tied to specific defense contracts, according to Nikkei. However, from now on, the bank will greatly expand its lending targets to include not only companies participating in Ministry of Defense bids but also startups and small and medium-sized enterprises that manufacture weapon-related components.

Exterior view of Mitsubishi UFJ Bank located in Nagoya, Japan. Mitsubishi Jisho.

The bank will also consider loans for “dual-use” technologies—those with both civilian and military applications—such as artificial intelligence (AI), sensors, drones, and satellite components, provided they align with the Japanese government's security policies. Nikkei noted, “Not only Mitsubishi UFJ but also other major commercial banks are generally expected to follow suit in expanding financial support for the defense sector.”

However, the policy of prohibiting loans to companies involved in producing inhumane weapons such as cluster munitions and nuclear weapons will be maintained. Businesses deemed likely to be used for exporting weapons to conflict zones will also be excluded from lending eligibility. Mitsubishi UFJ will initially implement these new standards temporarily and decide on the final policy after monitoring the government's overall policy direction.

This shift within the financial sector coincides with the Japanese government accelerating its overhaul of defense policy. The administration of Japanese Prime Minister Sanae Takaichi is rapidly increasing defense spending and investments in the defense industry. The stated reasons are to counter China's growing military power, rising tensions in the Taiwan Strait, and North Korea’s military buildup. For the 2026 fiscal year, Japan’s defense-related budget has surpassed 9 trillion yen (KRW 79 trillion), up 1.7 times from five years ago. The Japanese government is also working to revise the “three security policy documents,” core national documents that outline the country’s direction for defense policy, defense capabilities, equipment, and budget plans, by the end of this year.

Japanese corporations are also beginning to move in this direction. Kawasaki Heavy Industries is drastically expanding its shipbuilding production bases, while Mitsubishi Heavy Industries and IT company NEC are planning to collaborate on developing command and control systems utilizing drones and AI. Nikkei reported, “With the inflow of private capital from the banking industry, it is highly likely that the expansion of the defense sector will accelerate even further.”

This content was produced with the assistance of AI translation services.