The bank targets generating at least 40 percent of its profit from overseas within the period, compared with about 28 percent now, Takashi Morimura, the head of global banking at lending unit Bank of Tokyo-Mitsubishi UFJ Ltd., said in an interview yesterday. It aims to open branches and offices in countries including China, India and Indonesia, he said.
Mitsubishi UFJ and domestic rivals are eyeing assets and markets in Asia and North America to make up for slowing growth opportunities at home, where the population is falling and low interest rates are squeezing profit margins. Japan’s three biggest banks took their largest slice of the Asian loan market in more than a decade last year as European lenders retreated.
“Before their European rivals rebound from the region’s sovereign crisis, Mitsubishi UFJ will aggressively capture personnel and deposits outside of Japan in the years ahead,” said Shinichiro Nakamura, a Tokyo-based banking analyst at SMBC Nikko Securities Inc. “By grabbing more deposits in overseas markets, they can boost lending abroad, while at the same time looking to buy stakes in some Asian banks.”
Bucking Industry Cuts
Under Bank of Tokyo-Mitsubishi President Nobuyuki Hirano’s plan to boost overseas profit growth, the latest hiring plans would increase the workforce at its global division by 15 percent from about 20,000, Morimura said. That contrasts with the worldwide banking industry’s more than 130,000 job cuts announced last year as lenders cope with stricter capital rules and Europe’s debt woes.
Mitsubishi UFJ shares fell 0.5 percent to 386 yen as of 11:14 a.m. in Tokyo Stock Exchange trading. Japan’s benchmark Topix (TPX) index slipped 0.1 percent.
The company, which got 79 percent of its revenue from Japan in the year ended March 2011, is also adding 50 derivatives traders and 150 sales and research staff worldwide over three years, global markets chief Hitoshi Suzuki said in an interview this month.
In Asia, Mitsubishi UFJ is seeking stakes in China, Hong Kong and Taiwan banks to help accelerate overseas profit growth to 10 percent annually over the next three years from an average of 7 percent for the past three, Morimura said. About 6 percent of revenue comes from Asia, excluding Japan, according to data compiled by Bloomberg.
In North America, the bank’s second-largest market, Mitsubishi UFJ is searching for takeover targets, mainly on the U.S. west coast, to boost its commercial banking operations and counter sluggish loan demand at home.
The lender spent $3.5 billion in 2008 to purchase San Francisco-based UnionBanCal Corp., where it now employs about 10,000 people. Morimura said he doesn’t plan to add workers at UnionBanCal, where he once served as president.
It bought Santa Barbara, California-based Pacific Capital Bancorp for $1.5 billion in March.
“Acquisitions and investments will be the big theme for us in the coming years,” Morimura said. “In addition to the west coast, we’ll be also looking at the U.S. east coast to search for acquisition targets.’
Japanese companies, bolstered by a strong yen, last year acquired the most overseas assets since at least 2000, with about 800 cross-border deals worth $88.7 billion, data compiled by Bloomberg show.
Mitsubishi UFJ’s trust banking arm is also looking for takeover targets. It plans to invest in a U.S. fund management firm in the next three years, Mitsubishi UFJ Trust and Banking Corp. President Tatsuo Wakabayashi said this month. The unit signed a deal for 15 percent of AMP Ltd.’s Australian asset management business last year for A$425 million ($441 million).
Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- biggest bank by market value, in January agreed to buy Royal Bank of Scotland Group Plc’s aviation division for $7.3 billion.
Mizuho Financial Group Inc., the third biggest, last year bought a 15 percent stake in Joint-Stock Commercial Bank for Foreign Trade of Vietnam for about $570 million.
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