■  International Banking Expansion of Overseas Network Strengthening of Risk Management Core IT System Upgrades Strengthening of Compliance System Capital Strategies and Business Alliances with  Major Asian Financial Institutions Development of Professional Human Resources  Required for Overseas Business Growth SMFG  2011 14 SMFG offers value-added services to its clients (corporations,  financial institutions, governmental organizations and public enti- ties) operating globally by creating tailor-made solutions which  meet diverse local needs, mainly through SMBC’s International  Banking Unit. management subsidiary of Kotak Mahindra Bank* in India, for  the establishment of infrastructure funds in India.  SMBC continues to develop its banking networks and expand  Asian businesses in diversified ways by establishing alliances with  major local financial institutions in Asia. * Kotak Mahindra Bank, with which we have established a capital and  operating alliance, is the core bank of the Kotak Mahindra Group. SMBC has three regional headquarters: in Europe, the  United States and the Asia-Pacific region; and subsidiaries in  such emerging markets as China, Russia, Brazil and Malaysia.  Through this network, it has established a system which quickly  and flexibly responds to the diverse needs of each region. It  strives to become a global commercial bank which can exten- sively demonstrate its strengths for the diverse business oppor- tunities in the international market. SMBC is pursuing its overseas business development and the  advancement of information processing and management sys- tems in order to further support the global development of our  clients’ businesses. SMBC has upgraded the Asian accounting  system as part of its plan to promote the strengthening of its  overseas administrative system. Furthermore, it also works to  further advance client information and business management  systems. SMBC is working to expand its overseas network of branches  to improve their services for the Japanese companies and to  enhance their presence in emerging markets. SMBC (China) opened two new branches and two new  sub-branches in the fiscal year 2010: Shenyang branch and  Shanghai (Pixi) Sub-branch in June and July 2010, respectively,  and Changshu Sub-branch and Shenzhen branch in January  and May 2011, respectively. The SMBC Group will use its net- work in China, which consists of branches and offices in 15  locations, to enhance the quality of its financial services. SMBC is continuously enhancing its credit monitoring system  as part of its plan to reinforce its credit cost control system,  and it has also established specialized credit management  departments in Europe and the United States, in addition  to the International Credit Management and regional Credit  Departments. Having established the Risk Management Department  Groups in Europe and the United States, it is building a com- prehensive risk management system especially made for the  local markets. As the global trend towards strengthening financial regulations  continue, and based on the understanding that it is essential  to further strengthen the compliance system as our business  grows, we are further focusing on enhancing the management  system by improving the collection and analysis of information  related to regulatory changes, and providing such management  resources as human resources. In responding to the strengthening of regulations related  to economic sanctions in each country, we continue to pursue  more sophisticated and efficient means to prevent money- laundering and financing for terrorist activities. The alliance strategies in Asian countries are specifically planned  to take the advantage of the special attributes of each country  and region. We plan to enhance our solutions such as expand- ing our Asian currencies services for each region. In December 2010, the bank executed a Memorandum of  Understanding on Mutual Business Cooperation with RHB Bank  Berhad, Malaysia’s fourth-largest bank by market capitalization  (as of the end of March 2011), a strategic partner for around the  last 30 years. The bank aims to further strengthen this alliance  relationship. Additionally, in March 2011, the bank executed the  Cooperative Agreement with Kotak Mahindra (UK) Ltd., an asset  We are further improving our training and educational programs  in order to respond appropriately and promptly to the increas- ingly diverse and highly sophisticated needs of our clients. To  gain international financial experience, we place our promising  employees in our overseas offices or at the overseas special- ized financial institutions outside of the Group. As SMBC’s first  attempt, it invited employees, including overseas national staff, 