MUFG mulls Asian focus on investment banking

PUBLISHED : Thursday, 12 January, 2012, 12:00am
UPDATED : Thursday, 12 January, 2012, 12:00am


Mitsubishi UFJ Financial Group, Japan's largest bank by assets, is looking to shift its traditional commercial banking business model in Asia to becoming more investment bank-driven. This comes at a time when many US and European banks are looking to shrink their operations.

Deputy president Tatsuo Tanaka, who oversees MUFG's global business, said yesterday that after acquiring a stake in Morgan Stanley, MUFG had become more investment-bank driven and wanted to bring its experiences to bear in Asia.

'We have a very strong footprint in traditional banking. We now want to shift some of our experience in investment banking in the US to Asia, and operate under a more commercial-investment bank operating model,' Tanaka said.

MUFG was one of the most active Japanese lenders to expand overseas during the financial crisis. It bought out UnionBanCal in the US in 2008. It also has held just over 20 per cent of Morgan Stanley since the crisis.

Tanaka said that while MUFG was strengthening its investment banking business at a time when US and European banks were pruning their operations, they might still share the same goal - operating under a commercial-investment bank model.

Plagued by the euro-zone crisis and stricter liquidity and capital requirements, many European banks are under pressure to shrink their balance sheets and sell assets.

Tanaka said MUFG was 'always ready' to go after good merger and acquisition deals, just as it was during the financial crisis.

It bought the project finance assets of Royal Bank of Scotland in Australia last year and will complete the purchase of a 15 per cent stake in the funds management unit of Australian wealth manager AMP in March.

In China, it has a wholesale banking business and ranks first in terms of profits among foreign lenders.

To secure its foothold in China, Tanaka said the bank would need to expand into commercial and retail banking, servicing small and medium-sized enterprises and individual customers.

But cracking open the Chinese retail market could be challenging and costly, as many banks have found. Tanaka said the bank was actively evaluating how to approach this goal but stressed that 'it was almost impossible to grow a retail basis organically'.

MUFG hopes to increase it staff to 3,000 on the mainland within three years, up from 2,200 now. It owns 0.2 per cent of Bank of China, which has a large exposure overseas.