MUFG eying to buy more banks in the US

Mitsubishi UFJ Financial Group (MUFG), Japan`s largest banking group and the world`s second largest bank holding company, is planning to spend about $5.5 billion in acquiring more US banks as it seeks to expand in the world's largest economy.

Tatsuo Tanaka, head of global banking of Tokyo-based MUFG said that the bank is looking at seven US banks in order to increase its overseas profits by more than 40 per cent to about $ 11 billion. Its US operations account for about 60 per cent of its total profit for its overseas business.

MUFG, which is the only Japanese bank with a sizeable presence in the US retail-banking market, is looking at mid-size banks on the West Coast or in Texas or Arizona and does not mind even if they have been declared sick by the US Federal Deposit Insurance Corporation (FDIC), said various media reports yesterday.

The bank returned to profit last year on the back of an improving global economy to post a net profit of Y388.7 billion in the year to March 2010, after a loss of Y256.9 billion the year before.

The bank expects to post a net profit of Y400 billion ($4.3 billion) for the current year, after having raised over $10 billion through share sale in December in order to raise its Tier 1 Capital Ratio.

Although dubbed a conservative bank that shied away from high-risk subprime assets lent by US banks to high-risk American customers, MUFG has substantial operations in the US.

MUFJ had invested $8.4 billion for a 20-per cent stake in the US securities firm Morgan Stanley in September 2008, (See: Mitsubishi UFJ to acquire 20 per cent in Morgan Stanley for $8.4 billion) joined forces this year with the Wall Street bank to make money as advisors for mergers and acquisitions.

In August 2008, it raised its stake in the San Francisco-based subsidiary UnionBancal Corp in a $3 billion deal (See: Japan's largest bank offers $3 billion for remaining stake of its US unit) and bought over two small failed US banks this April from the FDIC.