The Mitsubishi UFJ Financial Group Inc yesterday debuted as the world's biggest bank, surpassing US-based Citigroup Inc in assets through the merger of Japan's second and fourth-largest financial institutions.
Mitsubishi Tokyo Financial Group Inc won a protracted takeover battle against rival suitor Sumitomo Mitsui to buy No. 4 UFJ Holdings Inc in a stock swap valued at ¥3.4 trillion (US$30.1 billion) when shareholders approved the deal in June.
The firms combined holding companies yesterday, but their commercial banking operations will merge on Jan. 1 after a delay caused by linking their computer systems. The new Tokyo-based Mitsubishi UFJ has total assets of around ¥190 trillion (US$1.68 trillion), topping Citigroup's US$1.55 trillion, based on most recent company figures.
The takeover reduces Japan's Big Four banks to three and symbolizes the recovery of a banking industry once buried in bad debt. The bank plans to benefit by combining Mitsubishi Tokyo's international reach with UFJ's strength in retail banking, especially in western Japan.
Mitsubishi Tokyo and UFJ have posted a combined net loss of ¥139.3 billion in the year through March.
But adding individual outlooks gives the new company a joint profit of ¥735 billion in the current year to March next year, while together they are forecasting net income of ¥1.1 trillion for the year to March 2009.
On Wednesday, Mitsubishi UFJ said it would pair with Merrill Lynch & Co to set up a securities company targeting rich investors starting next year.
Mitsubishi UFJ may not be Japan's biggest bank for long.
Japanese Prime Minister Junichiro Koizumi plans to privatize the nation's postal system, which has ¥330 trillion in savings and insurance deposits and 24,700 offices around the country. That process, if approved by parliament, would begin in 2007 and could pose a retail banking threat to the likes of Mitsubishi UFJ.
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