INTERVIEW-Japan's Mitsubishi UFJ seeks U.S. growth through acquisitions

LONDON Fri Nov 23, 2012 4:36pm GMT

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LONDON Nov 23 (Reuters) - Japan's Mitsubishi UFJ Financial Group (MUFG) is looking at options including a big acquisition in the U.S. to vault it into the country's top 10 banks, confident of economic growth, a top executive told Reuters.

A significant purchase or a series of smaller deals would likely be in the west, where MUFG owns Union Bank and could get costs savings and synergies, Nobuyuki Hirano, president of the core banking unit of MUFG, Japan's biggest bank, said.

"Given the uncertain financial and economic environment we will not miss any opportunity if it arises," Hirano told Reuters during a visit to London.

MUFG expects the U.S. economy to grow 2-3 percent annually, Hirano said.

Union Bank ranks just outside the country's top 20 banks with $65 billion in deposits, and MUFG has said it wants to be in the top 10, which will require a doubling in size.

"A series of smaller scale acquisitions will open the way to get there," he said, adding that a bigger deal is also an option. "We are quite flexible," he said, adding that no talks on a big deal were underway.

Hirano became president of Bank of Tokyo-Mitsubishi UFJ (BTMU), the core retail and commercial bank arm of MUFG, in April and is keen to accelerate international expansion. He said he wants overseas earnings to grow to about 40 percent of group revenues, from around 30 percent now, led by growth in Asian markets outside Japan.

"We'd like to increase that up to 40 percent in the near future. That can give us higher potential growth," he said.

Hirano said MUFG and Morgan Stanley were both "comfortable" with their relationship, which stems from the Japanese bank's investment in the Wall Street firm in 2008. This has resulted in MUFG holding a 22 percent stake in Morgan Stanley and the pair co-operating to share business.

"We are good at global commercial banking...so we like to allocate our resources primarily in that zone, while Morgan Stanley is good at investment banking, so we want them to run their business and work together," he said. (Additional reporting by Alexander Smith; Editing by Elaine Hardcastle)

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