Mitsubishi UFJ Financial Group Inc. agreed to acquire about $3.7 billion of property loan assets from Deutsche Bank AG to boost its commercial lending on the U.S. East Coast.
Mitsubishi UFJ’s UnionBanCal Corp. unit will acquire a commercial real estate lending portfolio from PB Capital Corp., a unit of the German bank, it said in a statement today. The transaction is expected to be completed in the second quarter.
Japan’s biggest bank, which had 218.8 trillion yen ($2.2 trillion) in total assets at the end of March, is expanding abroad to counter anemic demand at home as European rivals scale back to comply with tighter capital rules. The deal follows the Tokyo-based lender’s 3.8 billion-pound ($5.8 billion) acquisition of Royal Bank of Scotland Group Plc’s project financing assets in Europe, the Middle East and Africa in 2010.
“Given MUFG’s assets, the deal would be very small,” said Shinichiro Nakamura, a Tokyo-based analyst at SMBC Nikko Securities Inc. “Although the debt crisis has eased some, there is still a trend that European banks are cutting overseas assets. MUFG is looking for targets, but they’re struggling to find good, big ones.”
Mitsubishi UFJ jumped 5.4 percent to 640 yen, closing at the highest level since June 2009 in Tokyo. The benchmark Nikkei 225 Stock Average rose 2.8 percent, lifted by a weakening yen. The currency touched 98.85 per dollar, its lowest level since June 2009.
About 35 percent of the Deutsche Bank unit’s loan portfolio is New York-based, according to today’s statement. Los Angeles makes up 9 percent and Chicago 8 percent, it said.
Some Deutsche Bank sales staff would join UnionBanCal, Japan’s Nikkei Newspaper reported earlier today, without citing sources.
“It it wouldn’t be a bad purchase because the market for commercial property in the U.S. is expected to grow from here,” Nakamura said.
First-quarter U.S. office vacancies dropped to 17 percent from 17.3 percent a year earlier and 17.1 percent in the fourth quarter, according to property researcher Reis Inc.
Takashi Morimura, deputy president at its main banking unit, said in an interview January, Mitsubishi UFJ is targeting acquisitions in the U.S. beyond its 2008 takeover of UnionBanCal and the purchase of Santa Barbara-based Pacific Capital Bancorp last year.
Mitsubishi UFJ is also targeting loan growth in Asia, sealing a 15.5 trillion-dong ($740 million) deal to buy a 20 percent stake in VietinBank in December. The bank has also expressed interest in buying a stake in Bank of Ayudhya Pcl from General Electric Co.
The Japanese bank had 21.9 trillion yen of overseas loans as of Dec. 31, a 20 percent jump from a year earlier, company data show.