Japan’s Mitsubishi UFJ Financial Group (MTU), is planning to strengthen its investment banking business by expanding its partnership with CIMB Group of Malaysia.
Mitsubishi UFJ’s decision to expand its ties with CIMB, a company with which the former already has a commercial banking partnership, comes on the heels of its decision to sell its stake in Kim Eng Holdings, the Singapore-based brokerage firm, to Maybank for about 34 billion yen ($424 million).
The group, through Bank of Tokyo-Mitsubishi UFJ Ltd, already owns 4% of CIMB, which has a solid regional footing. It plans to leverage both its own and its partner Morgan Stanley’s (MS) vast network to grow it business in the region. Last year, Mitsubishi UFJ and Morgan Stanley formed two joint ventures in Japan by integrating its respective Japanese securities companies engaged in investment banking and securities businesses.
Mitsubishi UFJ intends to expand its bond and equity underwriting business through CIMB ties and also expects to boost its asset management business in the region through partnership.
With a weakness in the Japanese market and lack of prospects for growth, such strategic tie ups augur well for the company. Japan, is reeling under the effects of March earthquake, tsunami and the subsequent nuclear disaster. In fact, Moody’s Investors Service, the rating unit of Moody’s Corp. (MCO), recently placed Japan’s debt rating for a possible downgrade as a result of higher-than-expected economic and fiscal costs of the earthquake. The other rating agencies also downgraded their outlook for the country.
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