Mitsubishi UFJ Financial Group Inc., Japan’s largest financial firm by market value, plans to boost its mergers and acquisitions business in Singapore by moving bankers into the unit that makes corporate loans.
The company will transfer all M&A bankers from its Singapore brokerage arm to the local commercial banking subsidiary in May, allowing the latter to begin advising clients on takeovers, Kazunobu Takahara, a Tokyo-based spokesman at Mitsubishi UFJ’s lending unit, said in an interview on March 5.
The move, which is subject to regulatory approval, will give the bankers more access to the corporate customers that have ties to the lending unit in Singapore. The transfer underscores Mitsubishi UFJ’s determination to capitalize on its ability to provide financing for takeovers to boost earnings amid waning profitability at its domestic lending operations.
“Mergers advisory is becoming a more important bread-and-butter business for Japanese megabanks as they can’t earn much from lending,” said Koji Hirai, president of Tokyo-based M&A advisory firm Kachitas Corp. “Bringing over local bankers who are familiar with Southeast Asia is an efficient way for a Japanese lender to boost the business.”
About 10 bankers will move from Mitsubishi UFJ Securities (Singapore) Ltd. to Bank of Tokyo-Mitsubishi UFJ Ltd.’s unit in the city-state, two people with knowledge of the matter said, asking not to be named as the information is private.
The shuffle “will enable us to provide various services including M&A financing in Asia,” Takahara said, declining to comment on the number of staff who are moving. “There is client demand for cross-border M&A advice.”
The Singapore brokerage arm will stop M&A advisory operations and focus on underwriting bond sales and trading securities, said Hiroaki Konishi, a spokesman at Mitsubishi UFJ’s securities unit in Tokyo.
Companies from Meiji Yasuda Life Insurance Co. to Toshiba Corp. are buying assets in developing Asia to expand in faster-growing economies. Japanese companies announced acquisitions in Asian emerging markets valued at $12 billion in 2013, the most in at least 12 years, data compiled by Bloomberg show.
Mitsubishi UFJ itself made the biggest deal, purchasing Thailand’s Bank of Ayudhya Pcl for about $5 billion. The Japanese lender would consider acquisitions in Indonesia and the Philippines, Deputy President Masaaki Tanaka said in an interview last week.
“Singapore is the hub for Japanese corporates to expand operations in Thailand, Vietnam, Myanmar, Indonesia and India,” Hirai of Kachitas said.
The value of mergers involving companies in the emerging Asia-Pacific region climbed to $422 billion in 2013, the highest in at least five years, data compiled by Bloomberg show.
For Japanese M&A, Tokyo-based Mitsubishi UFJ became the top adviser in 2013 through its joint venture with Morgan Stanley, according to data compiled by Bloomberg. It’s still No. 1 this year after advising Suntory Holdings Ltd. on its $15.9 billion acquisition of U.S. distiller Beam Inc. and providing a $12.5 billion bridge loan to the beverage maker for the transaction.
Mitsubishi UFJ Morgan Stanley Securities Co. will move its Tokyo headquarters from the suburban Mejiro district to Otemachi, the city’s financial hub, by 2016, the company said in a statement on March 5. A separate joint venture led by the Wall Street firm moved to Otemachi earlier this year.
The shift of M&A bankers and businesses in Singapore needs approval from Japan’s Financial Services Agency, Takahara said. There will be a clear separation, or firewall, between the mergers advisory and lending departments at Mitsubishi UFJ’s Singapore banking unit, he said.