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UFJ's branches are in the west and centre of Japan
(Agencies) |
Japan's Mitsubishi Tokyo Financial Group has
clinched a deal to take over troubled rival UFJ Holdings after weeks of
tense negotiations.
The signing of the agreement beats a rival bid from
Sumitomo Mitsui Financial Group, although the latter is refusing to
throw in the towel
.
The deal has formed the world's biggest bank, with 188.7 trillion yen
($1.7 trillion; ￡0.9 trillion) in assets.
A new holding firm, Mitsubishi UFJ, will be formed on 1 October 2005.
It will merge the two groups' holding companies,
commercial and trust banks, and brokerages
from that date.
Shares in the new firm, which they hope will be a "premier
comprehensive global financial group", will be listed in New York, London,
Tokyo, Osaka and Nagoya.
Of Japan's "Big Four" megabanks, MTFG is the second biggest.
UFJ, the smallest of the four, has been keen for some time to join
forces with a larger rival.
Weighed
down by bad loans, the bank crashed to a loss of 402bn yen in
its most recent financial year, prompting the resignation of senior
executives.
After Thursday's deal was announced, Sumitomo - the country's number
three - said it would press on with a rival bid for UFJ, whose market
value is about $23bn.
It had earlier argued that the proposed MTFG-UJF tie-up would breach an
existing agreement it had with UFJ to buy its trust banking operations.
But a court decision that the talks over the trust bank could continue
strengthened MTFG's position.
Experts have said the merger is not without risk.
The two bank's branch networks appear to fit well together, with three
quarters of MTFG's domestic branches located in eastern Japan, and three
in five of UFJ's in the west and centre.
"MTFG is strong in wholesale and UFJ in retail, meaning they have
totally different business aspirations and skills to achieve their goals,"
said Yoshimasa Nishimura, a former finance ministry banking bureau head.
But Mr Nishimura, now at Tokyo's Waseda University, warned: "There is
no guarantee the new bank won't get bogged down in confusion, as was the
case for past bank mergers."
The new chief executive will be the current
president of the Mitsubishi Tokyo group, Nobuo Kuroyanagi, and UFJ
president Ryosuke Tamakoshi is being earmarked
for the role of group chairman.
As part of the merger, which is subject to shareholder and regulatory approval, two brokerage units, Mitsubishi
Securities and UFJ Tsubasa Securities, will be combined to form
Mitsubishi UFJ Securities.
(Agencies) | 
Updated: 2004-08-13 12:24