UFJ Holdings Inc, Japan's fourth-largest lender, said it's considering a hostile bid from Sumitomo Mitsui Financial Group Inc, increasing pressure on Mitsubishi Tokyo Financial Group Inc to win investor support for its offer.
The bank is seeking outside advice regarding Sumitomo Mitsui's offer, while sticking to a plan to merge with Mitsubishi Tokyo to form the world's largest bank, Osaka-based UFJ said in a statement.
The Sumitomo Mitsui proposal, which includes more than ?500 billion (US$4.23 billion) in funding to UFJ, sets the stage for the first bidding contest in Japan's banking industry. UFJ reported a ?91.6 billion first-quarter loss on Friday and is trying to boost capital to reduce bad loans equivalent to more than one-tenth of total lending.
Sumitomo Mitsui's bid "will force Mitsubishi Tokyo to come up with numbers and to beat those numbers and there's going to be a fight with shareholders on this issue," said Kirby Daley, a strategist at Societe Generale Securities' Fimat division.
Mitsubishi Tokyo spokesman Susumu Niitsuma said Sumitomo Mitsui's proposal had ``no impact'' on its negotiations with UFJ that began last month. He said the bank hasn't made an offer of financial support to UFJ.
UFJ, which has more bad loans than any other bank in Japan, last week rejected Sumitomo Mitsui's merger proposal, saying it wants to push forward with its talks with Mitsubishi Tokyo.
ABN Amro Asset Management's Patrick Lemmens, a UFJ shareholder, wrote to the bank last week asking the lender to consider Sumitomo Mitsui's bid. Competition will result in the best terms for investors, he said.
"We are considering the content of the [Sumitomo Mitsui] proposal to show that we are committed to shareholder value and our clients," UFJ spokesman Minoru Soutome said.
UFJ's first-quarter loss compares with net income of ?132.2 billion a year earlier. Its bad loans rose 17 percent during the quarter to ?4.62 trillion, the highest in Japan, while costs to write off or provide against overdue credits at UFJ's two main units surged to ?306 billion.
"The normal reaction after the earnings could be acceleration of the merger process with Mitsubishi Tokyo," said Giovanni Brambilla, who owns UFJ shares among US$362 million of Asian equities he manages at Milan-based Anima SA.
"Mitsubishi Tokyo is the only one with the financial means to inject money into UFJ," Brambilla said.
UFJ's capital adequacy ratio, an important measure of a bank's financial health, fell to 9.01 percent from 9.24 percent in March. Regulators in Japan require banks with international operations to have enough capital to cover 8 percent of their lending.
The lender needs to boost its capital to offset additional bad-loan write-offs in its fiscal second-quarter ending Sept. 30.
"UFJ has to raise capital as soon as it can," said Nana Otsuki, a credit analyst at Standard & Poor's that rates UFJ's main bank unit BBB.
"It urgently has to deal with bad loans and the lack of capital is limiting its lending," Otsuki said.
Talks between UFJ and Mitsubishi Tokyo stalled after a Tokyo court ruled last month they couldn't include UFJ's profitable trust unit in the negotiations.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
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
A clandestine US Navy special missions unit colloquially known as SEAL Team 6 has been training for missions to assist Taiwan’s defense against an attack by China, the Financial Times said in a report yesterday. The navy commando team famous for killing Osama bin Laden in Abbottabad, Pakistan, has been conducting training to take part in a Taiwan conflict at its Dam Neck headquarters in Virginia Beach for more than one year, it said, citing sources familiar with the matter. “The secret training underlines the increased US focus on deterring China from attacking Taiwan, while stepping up preparations for such an event,”
RSS