LONDON: Japan's Mitsubishi UFJ Financial Group is confident it will buy more retail banks in the United States to vault it into the country's top 10 banks and allow it to make use of more dollar deposits, a top executive told Reuters.
MUFG, Japan's biggest bank, wants to become one of the 10 largest US banks as it seeks to grow its international business to make up for weak prospects in Japan due to an aging population.
Domestic rivals, including Sumitomo Mitsui Financial Group and Mizuho Financial Group, are also growing overseas. MUFG is looking for a significant purchase or several smaller deals to add to its Union Bank business on the US west coast, said Masaaki Tanaka, deputy president since 2012.
Tanaka said MUFG was not involved in any serious talks with potential US targets at present, but kept a list of targets that ran to "a couple of pages" and regularly changed.
"When it comes to M&A, it is opportunistic," Tanaka told Reuters in an interview on Friday.
"Ten years ago Japanese banks were viewed as asset junkies. But that's no longer (the case), we look at acquisition opportunities very seriously," he said.
Tanaka declined to name possible targets. MUFG has looked in the past at Citizens, the US bank owned by Royal Bank of Scotland that is due to be floated this year, but he said it was unlikely to make an offer and an IPO appeared to make sense for that business.
Tanaka said MUFG was looking to add assets of at least $30 billion and would consider a deal of a similar size to Citizens, which has assets of $127 billion.
With US assets of $107 billion MUFG ranks as the country's 29th biggest holding company, although stripping out investment banks, insurers and other firms it ranks about 15th.
It bought UnionBanCal Corp, the holding company for California-based Union Bank, in 2008 and has made some smaller acquisitions since.
Tanaka said it wants to expand its US retail bank to add more dollar deposits, as Japanese companies are increasingly borrowing money in dollars to invest in the United States or to make overseas deals.
"It's very important for MUFG to grow its deposit base in the States. So our retail bank will expand its footprint, branch network, hire more people and think about acquiring some banks to expand our deposit base," he said.
MORGAN STANLEY:
Tanaka, when chief executive of MUFG's Americas business, was a key architect of its US expansion. He also sits on the board of Morgan Stanley, which MUFG owns 22 percent of after investing in the Wall Street firm in 2008.
The pair have a number of joint ventures and co-operation agreements.
Tanaka said there was no need to change its holding in Morgan Stanley, which contributed 8 percent to the Japanese bank's net income in 2013 and should rise this year, possibly to 10 percent or more, he said.
"Twenty-two percent is the right number, a good number for us," Tanaka said, adding MUFG would face more regulatory restrictions if it took its stake over 25 percent.
"Our relationship between the two should stay in the current fashion so that we can work together as one single partnership."
MUFG is also expanding in Asia outside Japan, and in December bought a 72 percent stake in Thailand's Bank of Ayudhya for $5.3 billion.
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