The spokesman said the agreement would help Sumitomo Corp cope with any unforeseen funding difficulties. "We are not facing any problems right now. We are just trying to prepare for unpredictable situations that may occur. It is similar to taking out a new piece of insurance," he said.

The spokesman said the deal would help Sumitomo Corp meet increased demand for dollar funds stemming from the recent deregulation of foreign exchange transactions in Japan.

"The deregulation of foreign exchange transactions since April has led to a rise in the amount of dollar-denominated settlements conducted domestically and increased our demand for dollar funds," the spokesman said.

Other foreign banks in the deal besides Citibank, the arranger of the deal, included Barclays Bank Plc, Deutsche Bank AG and Societe Generale

The dealguarantees that Sumitomo Corp will be able to borrow up to $600 million from the syndicate anytime within a 364-day span. The commitment can be extended upon expiry if necessary, the Sumitomo Corp spokesman said.

Such "364s", which were developed in the United States and Europe, have become popular in Japan since NEC Corp signed a yen loan commitment with foreign banks in March.

Because such loan commitments are for less than one year, they have a zero risk weighting under Bank of International Settlements (BIS) regulations, whereas loan commitments of one to five years have a 50 per cent risk-weighting even if they are not drawn on.

The spokesman said Sumitomo Corp had asked Sumitomo Bank Ltd to arrange a similar yen commitment line agreement worth approximately 300 billion yen. He said that deal might be finalised by the end of the month.