Sumitomo Mitsui Trust Targets $129 Million European Acquisition

Sumitomo Mitsui Trust Holding Chairman Hitoshi Tsunekage
Hitoshi Tsunekage, chairman of Sumitomo Mitsui Trust Holdings Inc. and incoming president of Sumitomo Mitsui Trust Bank Ltd., Photographer: Akio Kon/Bloomberg

Sumitomo Mitsui Trust Holdings Inc., the Japan’s fourth-biggest lender by market value, may spend as much as 10 billion yen ($129 million) to buy a European asset manager as the region’s financial firms weather its debt crisis.

The bank, created via merger of Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc. in April, plans to boost assets under management by 7 percent to 63 trillion yen by March 2016, Hitoshi Tsunekage, chairman of the company, said in an interview on Dec. 28.

“Doldrums in Europe and the stronger yen are pushing acquisition costs down to attractive levels and providing us with a better investment environment,” he said. “There are many well-performing asset management firms in the U.K.,” he said without elaborating on a specific target.

An acquisition would follow the Tokyo-based bank’s 35 million pound ($53.9 million) purchase of a 40 percent stake in London-based asset manager NewSmith LLP. Europe’s debt crisis has increased the risk of government and bank defaults across the region, raising credit costs and pushing banks to sell assets to boost capital.

NewSmith had 2.1 billion pounds worth of assets under management as of Dec. 31, 2010, Sumitomo Mitsui Trust said in a statement on Dec. 14 announcing an agreement to buy the stake.

The purchase of foreign assets by Japanese companies has been fueled, in part, by the yen’s strength against other major currencies. Japanese acquisitions abroad have climbed to about $88 billion this year, the most in any of the 12 years for which Bloomberg data is available.

The 17-nation euro has dropped against the dollar and yen this year amid concern the debt crisis will weigh on the region’s economic growth. Europe’s shared currency fell yesterday to 100.06 yen, the weakest level since June 2001.

The yen has risen 4.6 percent against the dollar this year to 77.6 yen as of 5:30 p.m. in Tokyo. The currency is the best performer and only gainer among the 16 major currencies tracked by Bloomberg.