Investment

MUFG CEO hunts to acquire more overseas asset managers

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The bank has been the most aggressive Japanese lender in snapping up overseas assets, as it diversifies business and expands in markets such as Southeast Asia to counter rock-bottom interest rates at home.

Tuesday 09, April 2019

(Bloomberg) --Mitsubishi UFJ Financial Group (MUFG) is seeking fresh opportunities to buy asset managers following last year’s $2.9 billion Australia deal, as Japan’s biggest bank tries to make up for grim prospects at its domestic lending business.

Kanetsugu Mike, the Chief Executive Officer of MUFG, said, “We said we would like to spend about JPY 1 trillion ($9 billion) two years ago, and we have not spent that much yet.”

He said the bank will also consider purchasing asset finance portfolios if opportunities arise that are similar to DZ Bank’s aviation unit, which MUFG agreed to buy last month.

The bank last October agreed to buy Commonwealth Bank of Australia’s global asset management arm for AUD 4.13 billion ($2.9 billion), its largest deal in that industry.

The lender aspirations to purchase asset managers were earlier revealed by trust banking unit chief Mikio Ikegaya in a 2017 interview. The lender has said it wants to expand assets under management to about JPY 100 trillion, up from about JPY 82 trillion including the CBA unit, known as Colonial First State Global Asset Management.

In its three-year business plan ending in March 2021, the bank said it will boost the profitability of its lending portfolio by expanding in areas such as leveraged, acquisition and aviation finance, while disposing of low-return assets. It has offloaded stakes in UK investment firm Standard Life Aberdeen and Brazil’s Banco Bradesco in recent months.

“We need to reshuffle our portfolio to take on more profitable assets, our overseas businesses have grown significantly in the past decade but we have to make them leaner,” Mike said.

Mike also signalled that he will strengthen the bank’s compliance team to keep up with global regulatory requirements. “We’ve made a lot of progress, but there remain parts we need to bolster,” he said, when asked whether the lender plans to hire more compliance staff.

As a result of its overseas expansion, MUFG has faced increasing scrutiny by authorities, especially in the US. In February, the Office of the Comptroller of the Currency ordered it to fix deficiencies in its adherence to anti-money laundering and bank secrecy rules at its US branches.

TAGS : MUFG, Kanetsugu Mike, Commonwealth Bank of Australia, CBA, Colonial First State Global Asset Management, Standard Life Aberdeen, Banco Bradesco

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