Japan's MUFG in talks to buy RBS assets: source

3rd November 2010, Comments 0 comments

Mitsubishi UFJ Financial Group is in talks to buy project financing assets from Royal Bank of Scotland for 4.0 billion pounds, a source close to the matter said on Wednesday, confirming media reports.

Tokyo's Nikkei newspaper reported on Wednesday that MUFG planned to take RBS' loan assets, particularly infrastructure loans in Europe, Middle East and Africa, as well as some of the bank's sales force.

RBS is in discussions over sale of selling project financing assets, rather the entire business, the source told AFP.

The assets are worth the equivalent of 4.6 billion euros or 6.4 billion US dollars. An RBS spokesman declined to comment.

MUFG and the British government, which controls 84 percent of RBS, are trying to sign an official deal by year-end and complete the transaction in the first half of 2011, the Nikkei newspaper also reported.

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, according to the Nikkei.

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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