Attempting to cut short a potential tug-of-war among Japan's banking titans, UFJ Holdings Inc rejected a bold competing bid yesterday by Sumitomo Mitsui Financial Group to enter into merger talks.
Weighed down by bad loans, Osaka-based UFJ is already in discussions to tie up with Mitsubishi Tokyo Financial Group Inc, which would create the world's largest bank.
UFJ spokesman Akihiro Furutani said that his company was not interested in the competing bid from Sumitomo Mitsui and that it wanted to continue talks with Mitsubishi Tokyo.
"UFJ has been contacted by Sumitomo Mitsui and has rejected its offer to begin merger talks," he said.
A Tokyo court dealt UFJ-Mitsubishi Tokyo negotiations a setback this week when it granted a request from a Sumitomo Mitsui affiliate to halt talks about the trust banking part of the deal.
Sumitomo Mitsui's move was an unusually freewheeling move in Japan's conservative banking industry, but it was unclear what the bank's next move would be.
While a hostile takeover would be feasible, such mergers are extremely rare in Japan.
UFJ and Mitsubishi Tokyo, two of Japan's four banking giants, announced July 16 that they were in formal merger talks and hoped to have a basic agreement by the end of the month to complete the merger by September next year.
With combined total assets of around ?188 trillion (US$1.7 trillion), UFJ and Mitsubishi Tokyo would create the world's largest bank by assets, surpassing US-based Citigroup Inc's US$1.19 trillion.
On Tuesday, however, the banks were ordered to stop their discussions by the Tokyo District Court, which acted at the request of Sumitomo Trust and Banking. The court had said the talks violated an agreement in May that Sumitomo Trust had with UFJ to buy UFJ's trust banking operations.
UFJ, the smallest of the coun-try's "Big Four" banks, quickly challenged the court order, raising the likelihood of a long legal battle and delays to its merger hopes.
Under Japanese law, the court must consider UFJ's challenge and issue a new decision. If UFJ's appeal is rejected, the bank can ask a higher court to consider the case.
UFJ also had the option of trying to get Sumitomo Trust to drop its case by negotiating a settlement. But it's unclear if Sumitomo Trust would agree, since it stands to become the country's largest trust bank with a tie-up.
Analysts say a merger with Mitsubishi Tokyo would help UFJ resolve billions of US dollars of bad loans on its books left over from the collapse of Japanese assets in the early 1990s. The loans have plagued UFJ since it was formed from a merger of Tokai Bank, Sanwa Bank and Toyo Trust and Banking three years ago.
Merrill Lynch bank analyst Yoshinobu Yamada said Mitsubishi Tokyo and UFJ would be a good fit, because Mitsubishi Tokyo's global reach and big corporate clients wouldn't overlap with UFJ's strengths in retail banking.
A merger of UFJ and Sumitomo Mitsui -- which would have had assets of ?180 trillion -- would have combined two of the country's trust bank giants, Yamada told Dow Jones Newswires. But it would have also left them with a total ?2.8 trillion in debts they owe the government for a bailout in the 1990s.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
RSS