Bank Leviathan on the horizon

[Mulboyne]

UFJ, Mitsubishi Tokyo eye merger to set up world's largest bank

Wednesday, July 14, 2004 at 07:21 JST
TOKYO — The UFJ group has decided to enter into merger negotiations with the Mitsubishi Tokyo Financial group, sources familiar with the UFJ decision said Wednesday. The anticipated merger will produce the world's largest banking group with total assets of 190 trillion yen, topping the Mizuho Financial group.

UFJ has asked Sumitomo Trust & Banking Co to rescind its decision to sell UFJ Trust Bank, the sources said. UFJ hopes to speed up its bad debts disposal while Mitsubishi Tokyo believes its merger with UFJ will boost profitability and competitiveness, according to the sources. (Kyodo News}

Bloomberg News Here

The end result (off the top of my head) would be a merger of Mitsubishi Bank, Bank of Tokyo, Tokai Bank, Sanwa Bank, Toyo Trust, Central Leasing, Kokusai Securities, Nippon Shinpan and Tsubasa Securities. All independent companies in the bubble.

[Taro Toporific]

UFJ, Mitsubishi Tokyo eye merger to set up world's largest bank

Bummer. Besides being Japan's second-largest bank, Mitsubishi Tokyo (MTFG) is just about the healthiest bank in Japan and offer the best currency exchange rates. The merger with UFJ, the worst and the sickest bank, has got to be B-A-D, bad.


Tokyo mixed on bank merger talk
Wednesday, July 14, 2004 Posted: 0341 GMT (1141 HKT)
(CNN) --Tokyo stocks are mixed at midday Wednesday after banks rose on reports two big groups would enter merger talks.

[Neo-Rio]

I have no love for Mizuho ginko anyway.

I was going to do a server upgrade contract with my team of Japanese colleagues when Mizuho requested that I not do the job because I was a gaijin... despite having a lot more experience in the field than some of the other people that got the contract.

Now that's just fucked.

[Taro Toporific]

....Mizuho requested that I not do the job because I was a gaijin... .

<whine> Eiiiiiii? Demo gaijin....</whine>

[amdg]

requested that I not do the job because I was a gaijin

What the hell was their problem?:x Allowing you access to the server could have compromised security, a la "Neo-Rio's 11"? Or perhaps it was that being in the vicinity of so many cash machines might have tempted you to do a snatch and run, as indicated in those helpful bank warning notices...

[Captain Japan]

Is any of this merger horseshit going to result in me being able to use my Citibank ATM card at one of their branches on a Saturday?

[Mulboyne]

Is any of this merger horseshit going to result in me being able to use my Citibank ATM card at one of their branches on a Saturday?

Almost certainly not, Captain. Strategically, the banks still compete with the post office and Citibank is linked to the post office ATM network.
[jeez...that felt like a big earthquake JST 3:12pm] Also, UFJ and Mitsubishi will need to combine their networks before they think about expanding access. And Sumitomo Trust are still very narked about not getting their deal anymore and may delay everything until they get paid to go away.

[Mulboyne]

FT Reporter on the planned merger

In a sea of acronyms, confusion reigns as merger mania hits Japanese banks

The clearest element in the whole saga is that international investors and investment bankers are incredibly excited about it.

To them, the tussle is an historic improvement on previous Japanese mergers, which were settled by faceless government bureaucrats with scant regard for companies and shareholders. As a result of SMFG's intervention, they argue, MTFG will have to pay up and could still have to respond to a cash bid for UFJ from its plucky rival.

Some optimists with pseudo-sociological leanings have even portrayed the battle for UFJ as the beginning of the end of Japan's "consensus society". Perhaps, but I am less excited by recent events. Leaving aside the fact we had to wait a long time for a contested bid in the world's second biggest economy - and that the target company is on its knees - this is no proper takeover battle.

Weeks into the process and with a deal on the table, we still do not know any of the crucial facts on which bid wars in the US and Europe are fought. SMFG sent UFJ a private letter that mentioned the size of a capital injection and potential cost cuts but not where these savings would come from.

It also forgot to specify how much it would pay for a company with a market value of $21bn or how it would raise an estimated Y1,400bn to repay funds owed to the government.

MTFG fared even worse, stubbornly refusing to disclose publicly the merger terms it would offer to UFJ. As for UFJ, you would expect a company in its situation to choose an investment bank at the earliest opportunity to advise on strategy and extract the highest price from rival suitors.

Incredibly, UFJ's management appears to think it has the experience to handle a takeover battle on its own and has not yet appointed bankers.

Starved of professional advice, UFJ neglected its duty to work for the best possible offer and refused to talk to SMFG, hiding behind the letter of an exclusivity agreement with MTFG. This sorry state of affairs has already claimed one victim - UFJ's shareholders, a third of which are international institutions. Regardless of the buyer, the purchase of their company will be decided behind closed doors and presented to them as a done deal.

Investors in MTFG and SMFG received similarly shabby treatment, being denied financial information that could significantly affect the prices of their shares. Part of the problem stems from the lack of a takeover code in Japan. In the US, the UK and, dare I say, Hong Kong, this phony war would be prevented by strict timetables and procedures for tabling bids.

But the real issue is the three big banks' chronic reluctance to inform the market. "Put up or shut up" is a commonly used phrase to get potential buyers to table their bids or walk away, but in Japan it appears to apply only to shareholders.

Unless that attitude changes, the much-talked about turnround in the country's corporate culture will be as real as the giant elephants crossing the digital screens in Tokyo's busiest intersection.

[Mulboyne]

Sumitomo (SMFG) has stepped back into the ring in the battle for UFJ
SMFG unveils hostile $29.2bn move for UFJ

The competition between two of Japan's largest banks, SMFG and MTFG, to become the biggest bank in the world by merging with rival lender UFJ, intensified on Tuesday after SMFG announced a $29.2bn hostile bid for the troubled bank.
SMFG said it would make a one-for-one stock offer that values each UFJ share at Y629,000, a 23 per cent premium to Tuesday's closing price of Y510,000. It added that it would also inject up to $6.37bn in cash to shore up UFJ's capital.
The planned merger would also mark the re-emergence of a Japanese financial services powerhouse on the global scene. With assets of $1,600bn, it would oust Citigroup, which has assets of $1,300bn, as world number one - though the US bank remains far more profitable.

The FT Lex column (no link - premium content) contends

Japanese banks clearly have a problems allocating their capital. That however, is no reason to blow $34bn on a rival which managed to lose nearly two-thirds that amont in three years.
...Japan's first big hostile takeover could end up being more hostile to the buyer's, not the target's, investors.

[Captain Japan]

double, double...

[Captain Japan]

Unless that attitude changes, the much-talked about turnround in the country's corporate culture will be as real as the giant elephants crossing the digital screens in Tokyo's busiest intersection.

Is he talking about the dinosaurs? I've never seen any elephants.

I think he's right about Japan though. Whenever anyone believes something might change that is the time to stop it from really happening.

[Mulboyne]

Financial Times: UFJ board split over merger plan

A boardroom split has emerged at UFJ, the Japanese bank, over its proposed merger with MTFG, a rival bank.
The company's three outside directors are opposed to the move while the four executive directors on its seven-strong board favour it, bankers said. The outside directors are concerned that UFJ is proceeding with its merger with MTFG before it has considered a rival offer from SMFG, bankers said.
Bankers said the boardroom split does not mean that the three outside directors favour the SMFG bid, but does indicate they are concerned that UFJ may not have abided by its responsibility to shareholders.

Those three outside directors:
Iwao Okijima - Hino Motors (formerly Toyota - essentially Toyota's man)
Hiroshi Hamada - Ricoh
Shosaku Yasui - Teijin