Japan's MUFG to buy 3.8 billion pounds of RBS assets
A subsidiary of Japan's Mitsubishi UFJ Financial Group said Monday it would buy a 3.8 billion pound portfolio of project-finance loans from Britain's Royal Bank of Scotland, helping expand its global reach.
The Bank of Tokyo-Mitsubishi UFJ said it had agreed on key terms with RBS for the proposed deal to acquire the loan portfolio worth around 3.8 billion pounds (6.1 billion dollars).
Through the purchase -- mainly of loans for natural resource and power infrastructure projects in Europe, the Middle East and Africa -- the Japanese group aims to gain a foothold in emerging markets and become a sector leader.
The proposal would include a transfer of employees, the Japanese firm said, adding the deal is expected to be finalised by the end of the year, subject to regulatory approval.
If completed, it will be one of the biggest acquisitions for MUFG since it paid nine billion dollars for a 21 percent stake in US bank Morgan Stanley at the height of the financial crisis.
It also reflects how Japanese banks are aggressively chasing overseas growth, using the yen's current strength to their advantage and offsetting weak lending demand in Japan's shrinking society.
On Friday, Japanese megabank Mizuho Financial announced a plan to buy a 500 million dollar stake in US investment firm BlackRock.
Mizuho Financial, Japan's second-largest banking group, agreed with New York-based BlackRock to acquire a 1.6 percent stake, or 3.07 million shares, including 2.45 million currently held by Bank of America, the largest US bank.
MUFG's move comes as financial institutions in markets such as the United States and Britain sell non-core assets to help them recover from the financial crisis.
RBS has axed more than 27,000 jobs since October 2008, when it was slammed by the global economic meltdown and subsequently rescued by the taxpayer. It is now more than 80 percent owned by the British government.
RBS recently agreed to sell 318 retail branches to Spanish banking group Santander after an EU demand that it cut operations in exchange for the billions of pounds of state aid it has received.
On Monday MUFG announced a 153 percent jump in net profit for its fiscal first half ended September, thanks to gains from bond-trading and lower credit costs.
MUFG said its net profit came to 357 billion yen (4.3 billion dollars) for the six months, compared with 141 billion yen in the same period a year earlier.
For the full fiscal year through March 2011, the bank lifted its net profit forecast to 500 billion yen from 400 billion.
Uncertainty remains as to whether Japan's top banks will be affected by rules under development for the world's financial institutions that are seen as systemically important.
Leaders of the Group of 20 nations last week backed rules calling for global banks to hold more capital as a buffer against the "irresponsible risk-taking" which triggered the economic crisis.
MUFG shares fell 0.25 percent in Tokyo on Monday ahead of the announcement, which came after the market closed.
© 2010 AFP