Mitsubishi UFJ Financial Group Inc. may buy project-finance assets from Royal Bank of Scotland Group Plc as Japan’s largest banks start deploying the $56 billion they’ve raised in share sales in the past two years.
RBS and the U.K. government, which owns 84 percent of the lender, have been negotiating with the Japanese company about a portfolio of project-finance assets valued at about 4 billion pounds ($6.4 billion), two people with direct knowledge of the matter said. No final agreement has been reached, they said.
Mitsubishi UFJ is taking advantage from RBS’s retreat from project finance after raising 1 trillion yen ($12 billion) in a share sale in December. The purchase would add to the Japanese bank’s acquisition of UnionBanCal Corp. in 2008 and this year’s takeovers of two smaller U.S. lenders, as Chief Executive Officer Katsunori Nagayasu seeks growth outside Japan.
“Japanese banks have long experience in project financing,” said Kim Young June, who helps manage the equivalent of more than $12 billion at Woori Asset Management Co. in Seoul. “It’s the right direction for Mitsubishi UFJ as it’s a field they know well and has great growth potential.”
RBS, Britain’s biggest government-owned bank, is selling assets including 318 U.K. bank branches and an insurance unit after receiving 45.5 billion pounds of government funding during the global financial crisis, more than any other bank in the world. It placed some project finance assets in its “non-core” division and identified them for sale as part of its strategic plan, the bank said in February 2009.
Japan Banks Prowl
Linda Harper, a spokeswoman for Edinburgh-based RBS, declined to comment. Beth Gilroy, a spokeswoman in New York for Mitsubishi UFJ, didn’t have an immediate comment, referring questions to the bank’s Tokyo headquarters. The talks were reported earlier today by Nikkei English News.
RBS Chief Executive Officer Stephen Hester, 49, is shrinking the bank, which last year posted the biggest annual loss in U.K. corporate history.
At the same time, Mitsubishi UFJ and rivals Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are looking outside of Japan’s stagnant economy for growth after raising a combined 4.5 trillion yen in stock sales.
Mitsubishi UFJ may spend more than 500 billion yen on additional bank acquisitions in the U.S., Tatsuo Tanaka, head of global banking, said in an interview in July. The Tokyo-based bank aims to boost overseas profit by more than 40 percent to 1 trillion yen, he said.
Sumitomo Mitsui’s head of international banking, Hiroshi Minoura, said in July that the bank may invest as much as $5 billion for a stake in a U.S. bank in the next three years. Mizuho may seek stakes in Asian investment banks and would consider spending about 100 billion yen on an acquisition should it find a suitable target, a senior executive said in September.
Japanese banks have sought to increase their share of the global market for financing everything from nuclear power plants to water-supply systems as overseas rivals scarred by the credit crisis retrenched.
That push has been helped by the Japan Bank for International Cooperation, the state-run agency that lends to overseas projects, often together with local commercial banks.
JBIC will seek to ally with Japanese commercial banks to provide syndicated loans totaling about $5 billion for clean- energy and water-supply projects abroad, Takashi Hongo, head of the agency’s environment finance engineering section, said in a September interview. JBIC would provide half of those loans, he said.