Japan’s MUFG on hunt for mega deals in US, Indonesia

Tokyo / Reuters

Japan’s biggest bank, Mitsubishi UFJ Financial Group (MUFG), is on the lookout for acquisition opportunities in the US and Indonesia as it pursues its goal of becoming a global financial powerhouse, the head of its core unit said.
“As a global commercial bank, the US and Asia are our base,” said Bank of Tokyo-Mitsubishi UFJ (BTMU) president Takashi Oyamada said in an interview. He didn’t say how much the bank plans to spend on potential new acquisitions.
“In terms of growth potential and demographic characteristics, (the next target) is Indonesia. We are looking for acquisition opportunities there,” Oyamada said, without specifying any targets.
Assets up for grabs in Indonesia include Australia and New Zealand Banking Group Ltd’s 39 percent stake in PT Bank Pan Indonesia Tbk. Singapore state investor Temasek Holdings has already tried to sell its stake in Indonesia’s Bank Danamon.
“We are not thinking about buying a commercial bank in Europe,” said Oyamada, 60, who has taken the charge of the office on April 1.
Long been seen as heir apparent to Nobuyuki Hirano in the top job at BTMU, the veteran insider is widely expected to also eventually become MUFG’s overall president, the post
Hirano now occupies.
Relatively unscathed by the global financial crisis in 2008, MUFG has been aggressively building up overseas operations. Total assets have grown 40 percent in the past five years to reach nearly 300 trillion yen ($2.67 trillion).
MUFG’s biggest deal in the United States so far was its $9 billion acquisition of over 20 percent stake in Morgan Stanley at the height of the financial crisis in 2008.
In Asia, the bank acquired a majority stake in Thailand’s Bank of Ayudhya Pcl in 2013 for over $5 billion. Last week it completed a deal to buy a fifth of mid-sized Philippine lender Security Bank Corp for nearly $790 million.
At home, Oyamada — a member of his college’s Aikido martial art team as a student — now faces the challenge of managing commercial banking business at a time when profitability has been undermined by the Bank of Japan’s adoption of negative interest rates.
Lenders are now charged for excess reserves they park at the central bank, making it costly for them to have deposit volume growing faster than loan volume.
Oyamada said it would be “very difficult” to pass the cost of negative interest rates on to retail depositors, given the potential for a public backlash among consumers.
For large corporate clients, there could be ways to make up for costs without directly charging fees on their deposits, he said, such as coaxing clients to buy other fee-generating services.
For financial institutions, however, he said it is “within the realm of possibility” that the bank would charge fees on deposits, though he stressed there is no specific plan to do so at this moment.