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Mitsubishi UFJ Mulls Multi-Billion Dollar U.S. Bank Acquisition

Bank of Tokyo Mitsubishi UFJ incoming President Nobuyuki Hirano
Nobuyuki Hirano, incoming president of Bank of Tokyo Mitsubishi UFJ Ltd. Photographer: Junko Kimura/Bloomberg

Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, is considering spending “several billion” dollars to buy a U.S. regional bank, incoming bank unit President Nobuyuki Hirano said.

The company is searching for targets mainly on the west coast to expand its commercial banking operations, Hirano, who became head of Bank of Tokyo-Mitsubishi UFJ Ltd. on April 1, said in an interview.

Mitsubishi UFJ accelerated its growth in the U.S. with the acquisition of a 22 percent stake in Morgan Stanley last year and San Francisco-based UnionBanCal Corp. in 2008, helping to counter sluggish loan demand at home. The Japanese bank’s west coast presence widened in March with a $1.5 billion deal to buy Santa Barbara, California-based Pacific Capital Bancorp.

“We are increasing the reach of our global commercial banking, that’s our core business,” said Hirano, who will take the bank’s management duties from group President Katsunori Nagayasu. “For investment banking, we have Morgan Stanley,” Hirano said in the March 26 interview.

Shares of Mitsubishi UFJ rose as much as 2.7 percent to 423 yen in Tokyo Stock Exchange trading today. They have gained 25 percent this year outpacing the benchmark Nikkei 225 Stock Average’s 19 percent increase.

Domestic Demand Wanes

Mitsubishi UFJ boosted overseas lending 9.6 percent to 18.2 trillion yen ($221 billion) as of Dec. 31 from 16.6 trillion yen in March 2010, the bank said in February. Corporate lending at home declined 8.8 percent to 43.5 trillion yen during the same period, dragging total loans down to 80.9 trillion yen from 85 trillion yen, data compiled by the bank show.

“After going through two financial crises in three years and weathering Japan’s biggest earthquake last year, I am set to lead the bank on a path of growth and evolution,” Hirano said. He joined the bank’s predecessor in 1974 before it merged with Bank of Tokyo Ltd. in 1996, and then with UFJ Bank Ltd. in 2005, according to its website.

Mitsubishi UFJ acquired its Morgan Stanley stake when it invested $9 billion in the company in October 2008, as the New York-based firm’s stock price tumbled in the wake of Lehman Brothers Holdings Inc.’s collapse. Hirano served on Morgan Stanley’s board from March 2009 to May 2011.

The Japanese bank exchanged $7.8 billion of Morgan Stanley convertible preferred stock for common shares in June 2011, making it the lender’s biggest common shareholder.

Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, is also looking abroad for growth. The company in January agreed to buy Royal Bank of Scotland Group Plc’s aviation division for $7.3 billion, following a 590 million euro ($787 million) deal to buy project-finance loans from Bank of Ireland in November.

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