Japan's MUFG to buy RBS project finance business: report

3rd November 2010, Comments 0 comments

Mitsubishi UFJ Financial Group (MUFG) plans to buy the project financing business of the Royal Bank of Scotland for an estimated four billion pounds (6.4 billion dollars), a report said Wednesday.

The leading Japanese banking group plans to take RBS' loan assets, particularly infrastructure loans in Europe, Middle East and Africa, as well as some of the bank's sales forces, the Nikkei newspaper said.

MUFG and the British government, which controls 84 percent of the international banking group, are trying to sign an official deal by year-end and complete the transaction in the first half of 2011, the newspaper said.

The Japanese group has been trying to expand its overseas operations to generate stable profits, as the domestic economic landscape has long been bleak.

The Japanese yen's recent appreciation against major currencies has helped move the deal forward, the Nikkei said.

Project financing is considered relatively low-risk lending because the loans are backed by future revenue from the financed projects and are not affected by the borrower's credit standing, the business daily said.

MUFG was the leader in US project financing in 2009 in terms of new loans, but is ranked 10th globally for the January-September period of this year, the Nikkei said.

The group aims to become the world leader in this field through the latest acquisition, it said.

© 2010 AFP

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