MUFG chief plans to ramp up assets in U.S. and Asia
Mitsubishi UFJ Financial Group <8306.T> plans to ramp up asset acquisitions in the United States and Asia, including acquisitions of local banks, its new head said, as Japanese lenders accelerate their overseas push to make up for falling spread margins at home.
"Given its broad and deep market, the United States is the place of importance for us. And in Asia, we expect strong growth," said Nobuyuki Hirano, who became president of the world's 12th largest bank by market capital in April.
The interview was conducted before the Bank of Japan surprised the market with radical monetary stimulus actions, including buying about 70 percent of government bonds sold in markets.
These moves are likely to push down already razor-thin loan interest rates, putting further pressure on the banks to increase their reliance on more promising markets elsewhere.
Earlier this week, MUFG acquired a U.S. commercial property loan portfolio from a Deutsche Bank unit worth $3.7 billion, making the Japanese bank the ninth biggest commercial real estate lender in the United States, up from 17th.
Hirano took over the helm of the company that has been aggressively been snapping up assets of overseas rivals. MUFG acquired over 20 percent stake in Morgan Stanley at the height of the financial crisis in 2008 and bought a $6.4 billion project financing loan book from Royal Bank of Scotland in 2010.
Hirano said his bank plans to expand its U.S. subsidiary, Union Bank, by "making full use of both inorganic and organic means."
In addition to the California-based bank with $97 billion in assets, MUFG also has its own team of bankers and branch network in the United States. Hirano said his company is considering setting up a U.S. holding company to better manage its expanding operations.
His remarks came as U.S. authorities are set to require foreign banks operating in the country to group all their subsidiaries under a holding company, subject to the same capital standards as U.S. holding companies.
"We are thinking about unifying branches of Union Bank (and MUFG). There are overlapping functions," he said, adding the move could allow the Japanese banking giant to utilize Union Bank's dollar funding.
The bank has said over the three years through March 2015, it aims to increase its overseas businesses' annual net operating profit by 35 percent from 264 billion yen ($2.65 billion)for the year ended March 2012.
In Asia, Hirano said the bank is looking to acquire a local commercial bank so it can kick-start local banking operations in the region, much like it has done with Union Bank in the United States.
Hirano did not name specific countries of interest, but sources have told Reuters the bank is bidding for General Electric's $1.8 billion stake in Thailand's Bank of Ayudhya (BAY) .
"Depending on the economic development phase of each market, we might start by consumer finance," he said, citing its consumer finance unit Acom Co's <8572.T> Thai operations.
Hirano said his bank is also seeking ways to secure higher returns on loans overseas as easy money policies by central banks worldwide push down yields on bank lending and financial products.
"We will increase loans with a more edgy flavor by expanding the targets of borrowers like those with non-investment grade ratings," he said.
($1 = 99.5500 Japanese yen)
(Additional reporting by Taro Fuse; Editing by Matt Driskill)