MUFG's Morgan Stanley Ties Deepen With Private Bank Stake

Mitsubishi UFJ Financial Group Inc. (8306)’s securities joint venture with Morgan Stanley (MS) will take a majority stake in the Japanese bank’s wealth-management business, deepening ties between the two firms.

Mitsubishi UFJ Morgan Stanley Securities Co. will hold 75 percent of the private banking unit of Japan’s biggest lender, the two companies said in a statement in Tokyo today, without disclosing a price. Mitsubishi UFJ’s main commercial banking unit will hold the remaining 25 percent.

Mitsubishi UFJ, which owns 22 percent of Morgan Stanley, will continue to run the business, which offers investing services to wealthy individuals in Japan, a person briefed on the matter said before the announcement. New York-based Morgan Stanley will provide research and investment products when the partnership takes effect in January, the person said.

Morgan Stanley Chief Executive Officer James Gorman, 55, has pointed to its ties with Mitsubishi UFJ as a strategic advantage as the world’s third-largest economy expands. The companies set up a pair of investment-banking ventures in Japan in 2010, two years after the Asian lender invested $9 billion the U.S. firm to help it stay afloat in the financial crisis.

Japanese households, which hold most of their $16 trillion of financial assets in cash, may shift more of their money to equities as market prospects improve, according to a September report by Cap Gemini SA (CAP) and Royal Bank of Canada. The country’s stocks are the best performers among major developed markets this year as Prime Minister Shinzo Abe tries to spark inflation with fiscal and monetary stimulus.

Credit Suisse

Credit Suisse Group AG, Switzerland’s second-biggest bank, last year bought HSBC Holdings Plc (HSBA)’s Japanese private banking operations and began taking over Standard Chartered Plc’s wealth-management accounts in the country.

Mitsubishi UFJ’s wealth-management business was previously a joint venture between Mitsubishi UFJ and Bank of America Corp.’s Merrill Lynch brokerage. Charlotte, North Carolina-based Bank of America last year agreed to sell its 49 percent stake back to Mitsubishi UFJ.

The unit’s name will change to Mitsubishi UFJ Morgan Stanley PB Securities Co. from Mitsubishi UFJ Merrill Lynch PB Securities Co., according to the statement. Its head office will move to the Otemachi business district in Tokyo from Nihonbashi.

To contact the reporters on this story: Michael J. Moore in New York at mmoore55@bloomberg.net; Russell Ward in Tokyo at rward16@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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