Japan’s MUFG withdraws from US retail banking in $ 8 billion deal with US Bancorp

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TOKYO – Mitsubishi UFJ Financial Group (MUFG) exits US retail banking with $ 8 billion sale of MUFG Union Bank (MUB) to US Bancorp as digital technology and industry consolidation crowd out small lenders.

The deal includes $ 5.5 billion in cash and $ 2.5 billion in shares that will give Japan’s largest lender a 2.9% stake in Minneapolis-based Bancorp, which will become the fifth-largest bank from the United States, the banks said on Tuesday.

As a result of the deal, which it plans to conclude by the end of June next year, MUFG will focus on corporate and investment banking in the United States through other units and through its partnership with Morgan Stanley, one-fifth owned by the Japanese bank.

“We cannot be successful without a certain scale of activity,” Morito Emi, general manager of corporate planning at the Japanese bank, said at a press briefing. “There are a lot of mergers and acquisitions going on there,” he added.

To compete, MUB, which has around 300 branches mostly on the west coast of the United States, would have had to invest heavily in new digital technologies to keep pace with its biggest rivals offering new online banking services, Emi said.

Consolidation of the U.S. banking sector accelerated under President Donald Trump, with transactions reaching $ 55 billion last year, the highest in more than a decade.

The number of commercial banks in the United States has declined by about 10,000, or 70%, over the past 20 years, as President Joe Biden’s administration seeks to deter mergers and acquisitions that it considers harmful to the competetion.

MUFG’s push into the US banking sector is part of a strategy to expand overseas business to increase profits, as ultra-low interest rates and shrinking population in Japan have made it difficult to earn money in the country.

The deal with Bancorp comes as MUFG focuses more on other parts of Asia.

Mitsubishi UFJ in 2008 paid around $ 3.5 billion for the third of Mitsubishi Union Bank that it did not already control. With assets of $ 132 billion, it provides banking services to businesses, businesses and individuals as well as wealth management.

In addition to Bancorp’s $ 8 billion in cash and shares, the Japanese parent company will also get around $ 9.6 billion in dividends or share buybacks at MUB, bringing the total value of the deal to $ 17. $ 6 billion.

Part of MUB’s administrative functions and its merchant and investment banking departments will be transferred to other parts of MUFG’s US operations.

($ 1 = 109.5700 yen)

(Reporting by Tim Kelly, Chang-Ran Kim, Ritsuko Ando and Elaine Lies in Tokyo Editing by Pravin Char and Mark Potter) (([email protected];))


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