The Japan Bank for International Co-operation (JBIC) is to lend US$38.5mn to Russia’s Sberbank.

Sberbank will on-lend the funds to the operator of Vostochny Port, which will purchase equipment from Japanese companies.

Speaking to the Japanese newswire Nikkei, a source said that JBIC – Japan’s export credit agency – is hoping to “break the trend” of Japanese banks avoiding doing business with Russian entities, as tension over the territorial dispute in the southern Kuril Islands persist.

In May, Japanese prime minister Shinzo Abe met with the Russian president Vladimir Putin to present an eight-point economic plan, through which co-operation between the two economic giants would be restored.

The loan is part of this initiative, and is the latest in a series of actions state-owned JBIC has taken to reopen ties with its neighbour to the north-west, stretching back to last year.

In September 2015, the head of JBIC Hiroshi Watanabe met with the Russian deputy economic development minister Stanislav Voskresensky to discuss ways in which Japan could participate in fund and build infrastructure projects in Russia’s Far East.

Following the meeting, Voskresensky told Russian media: “The head of the JBIC said Japan is inspired by China’s New Silk Road and Asian Infrastructure Investment Bank and intends to create a US$110bn fund to invest in Asian infrastructure.

Shortly after this meeting, JBIC said it would pump up to US$800mn into Russia’s port projects, through loans to Sberbank, VTB, VEB and Gzprombank, with US$100mn mooted in total for Vostochny Port.

In February 2016, JBIC announced plans to denominate the debt in yen, as it has done with the latest loan. At the time, the director of oil and gas Masayuki Tanimoto explained that this would help mitigate some of the risks of doing business in Russia.

“I think that it is possible to sign contracts in the Japanese yen, which will decrease exchange risks. For example, transactions on energy sources contracts are usually made in US dollars, but if we could use the yen, project financing would be a lot easier. It would ease the risks for Japanese consumers, and both Russia and Japan will benefit from it,” he told reporters accompanying a joint trade mission.

Then in September of this year, JBIC signed two MoUs designed to open Russia’s Far East to Japanese investment.

An MoU with the Far East Investment and Export Agency (FEIA) and the Far East and Baikal Region Development Fund (FEDF), two government agencies, led to the establishment of a special economic zone in the region. This will offer a favourable business climate to Japanese companies and investors.

Meanwhile an agreement with Novatek, Russia’s largest private natural gas producer, was signed with a view to joint participation in oil and natural gas projects in Russia’s east.

Under Shinzo Abe, Japan has been engaged in multiple territorial disputes with neighbouring countries to the south and west. Simultaneously, however, the economy has flat-lined. The olive branch to Russia suggests that for nationalist Abe, economic pressures outweigh those of a territorial nature for now at least.