UPDATE 1-Reuters Summit-MUFG mulling investment in Western bank

(For other news from the Reuters Japan Investment Summit, click here)

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TOKYO, July 1 (Reuters) - The core bank of Mitsubishi UFJ Financial Group Inc (8306.T), Japan's largest lending group, would consider investing in Western financial firms in the wake of the subprime crisis, a top executive said on Tuesday.

Tatsuo Tanaka, deputy president of Bank of Tokyo Mitsubishi UFJ, also said at the Reuters Japan Investment Summit in Tokyo that the lender is considering entering the Chinese retail bank market.

"We would of course consider investing in (Western) financials where capital has been depleted by the subprime," Tanaka said.

"But there's a difference between a financial investment and a strategic investment. Rather than looking to boost our short-term profits, we would build a mid- to long-term relationship with a financial firm," he said.

After a decade of faltering under bad debt, Japanese banks have cleaned up their balance sheets and rebuilt their businesses. Faced with a shrinking market at home, Tokyo's large lenders are once again looking abroad.

Largely unburdened by subprime losses, Japanese banks have been able to invest in their overstretched Western rivals.