Japan's Biggest Bank Wants to Get Bigger in the U.S.
September 11 2015 - 11:50AM
Dow Jones News
TOKYO—Mitsubishi UFJ Financial Group Inc. is looking for more
acquisitions to achieve its goal of becoming a top-10 lender in the
U.S., the Japanese bank's chief executive said.
MUFG, Japan's largest lender by assets, last year combined its
New York-based banking operations with wholly owned San
Francisco-based Union Bank. In April, it brought in Steve Cummings,
a former UBS Group executive, as the first non-Japanese head of its
U.S. division.
"We integrated businesses in the East and the West and tapped
Steve Cummings as the new CEO for our U.S. operations," said
Nobuyuki Hirano, MUFG's chief executive in an interview. "Now we
can map out a growth strategy with a sense of unity under the new
management."
Over the past years, MUFG has expanded in the U.S. via
acquisitions of small to midsize regional lenders through Union
Bank, which the Tokyo bank made a wholly owned unit in 2008. In
2012, it acquired a California lender, Pacific Capital Bancorp, for
$1.5 billion.
"We've been saying that our goal is to become a top-10 lender in
the U.S.," said Mr. Hirano, who leads both MUFG and its core
banking unit, Bank of Tokyo Mitsubishi-UFJ. "I think we need a
scale-up of size because our revenue isn't sufficient to cover the
rising cost of complying with legal and regulatory frameworks."
According to SNL Financial data as of December 2013, which MUFG
has cited in a presentation to investors, the Union Bank-BTMU
combined entity ranked 13th in the U.S. with deposits of $115
billion, right behind Atlanta-based BB&T Corp. with deposits of
$127 billion. At No. 10, State Street Corp. had about $182 billion
in deposits.
In contrast to Japan, where MUFG has plenty of deposits but
faces sluggish loan demand, MUFG says it has healthy loan demand in
the U.S. and deposits haven't kept up. In some cases, it is raising
U.S. dollar funds via a currency swap from yen to dollars.
"We'll consider an acquisition to complement our service and
products and shore up deposits in dollars," Mr. Hirano said.
In the year ended March 2015, MUFG became the second Japanese
company after Toyota Motor Corp. to post a net profit of more than
¥ 1 trillion ($8.3 billion), boosted by strong performance in its
overseas operations. About 20% of the profits came from
international businesses including Union Bank and Bank of Ayudhya
in Thailand, which MUFG acquired in 2013.
MUFG also has enjoyed profits from its 20% stake in Morgan
Stanley.
Mr. Hirano, 63, said a possible interest-rate increase by the
Federal Reserve this year could cause market turmoil and generate
unexpected losses from volatility in the short term. "We'll try to
deal with managing risk," he said.
Write to Atsuko Fukase at atsuko.fukase@wsj.com
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(END) Dow Jones Newswires
September 11, 2015 11:35 ET (15:35 GMT)
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