Mitsubishi UFJ Financial Group, Inc. MTU, the world’s largest bank-holding company, is seeking to expand its consumer banking business in Asia. The company has zeroed in on India, Indonesia and Philippines for the same, according to Bloomberg.
The current weakness in Japanese loan market, along with compressed margins, has triggered an interest in other Asian markets like India, which have recently begun to relax foreign ownership norms in the banking and other industry spaces. Notably, India and Indonesia allow foreign holdings of up to 74% and 40%, respectively; while Philippines allows complete ownership by foreign entities.
Taking hint from the 10% surge in average loans outstanding to non-Japanese borrowers in Asia in the recently acquired Bank of Tokyo-Mitsubishi UFJ Ltd.’s loan book, Mitsubishi UFJ intends to tap the booming Asian markets by acquiring stake in “relatively big-sized bank” that is “very strong in both corporate and retail consumer finance.” These activities will be similar to the $5-billion acquisition of Bangkok-based Bank of Ayudhya Pcl, closed two years ago.
Go Watanabe, CEO at the company’s Asia Oceania arm, intends to capture double-digit revenue growth in Asia within a span of 3 years, commencing from Apr 2015. Based on sources, Mitsubishi UFJ has shown interest in acquiring United Coconut Planters Bank from the Philippine government, which is considering the sale of its 74% stake in the same for $350 million.
Importantly, a sturdy capital and healthy liquidity position lend support to the company, as it strives to expand inorganically by pursuing global growth opportunities.
Currently, Mitsubishi UFJ carries a Zacks Rank #3 (Hold). UBS Group AG UBS is a better-ranked foreign bank, sporting a Zacks Rank #1 (Strong Buy).
Amid uncertain conditions in the U.S. markets, many companies are focusing on the burgeoning Asian markets. In June, Citigroup Inc. C revealed plans to double the number of wealth-management clients in Asia, which it expects will “grow disproportionately to the rest of the world.” Further, global giant, JPMorgan Chase & Co. JPM expanded its Asian operations in Dec 2014. (read more: JPMorgan Expands in Asia, Buys Aviva's Real Estate Business).
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