Mitsubishi UFJ Financial Group Inc. agreed to buy Bank of America Corp.’s stake in their private bank venture as Japan’s biggest lender expands services to wealthy households.
The Japanese bank will complete the purchase of the 49 percent stake in Mitsubishi UFJ Merrill Lynch PB Securities Co. on Dec. 26, the companies said in a statement in Tokyo today. Mitsubishi UFJ will pay 39 billion yen ($471 million), two people with knowledge of the matter said yesterday.
Mitsubishi UFJ joins Credit Suisse Group AG in expanding wealth management operations in Japan through acquisitions to compete for households’ $18 trillion in financial assets. The sale marks an end to the six-year venture with Bank of America as the Tokyo-based company deepens ties with Morgan Stanley.
“Japan’s private banking business can be challenging because wealthy individuals don’t want to give up control of their assets to a bank, unlike Europe,” said Yoshinobu Yamada, a Tokyo-based analyst at Deutsche Bank AG. “Mitsubishi UFJ has a well-established brand and wider client base, so the bank looks ready to expand its market share.”
Shares of Mitsubishi UFJ rose 1.1 percent to 382 yen at the close of trading in Tokyo before the announcement.
Merrill Lynch Japan Securities Co., the Japanese brokerage unit of Bank of America, will continue to provide mutual funds, derivatives and structured products to the private bank after selling the stake, the people said yesterday. Mitsubishi UFJ will keep the employees who join from Merrill Lynch, they said.
Bank of America, which employed 1,028 employees at its securities operations in Japan as of March 31, will focus on corporate and investment banking and trading businesses in the nation, the people said. Its Japanese unit had 52.6 billion yen in revenue for the year ended March, according to its website.
Mitsubishi UFJ Securities Holdings Co., the brokerage unit that oversees an investment banking venture formed with New York-based Morgan Stanley in 2010, will have a 51 percent stake after the deal, and Bank of Tokyo-Mitsubishi UFJ Ltd. will hold 49 percent, according to the statement.
Mitsubishi UFJ Merrill Lynch had 1.8 trillion yen of assets under management as of March 31, the companies said today. Revenue was 25 billion yen for the year ended March.
The venture started operations in May 2006 and had 444 employees as of April 1, according to its website. Its net income climbed 5 percent to 6.8 billion yen in the year ended March 31, its financial statements show.
Credit Suisse, Switzerland’s second-biggest bank, said last week it will ally with Standard Chartered Plc to add Japanese private banking customers as the U.K. lender withdraws from wealth management in Tokyo. Zurich-based Credit Suisse took over HSBC Holdings Plc’s private banking operations in Japan in June.