A strong yen and tight domestic market conditions have induced major Japanese banks to expand their footprint in the southeast Asian economies, many of which are experiencing relatively high economic buoyancy. Against the backdrop, Japan's retail and commercial bank Mitsubishi UFJ Financial Group Inc (MUFG) has worked out two deals in a single day.
Reports say Bank of Tokyo-Mitsubishi UFJ plans to buy 20 percent of VietinBank from the Vietnamese government for about $720 million (60 billion yen). The deal has come through at a time when the Vietnamese banking system is under significant strain owing to domestic economic volatility, spiraling inflation and tumbling asset prices.
Bank of Tokyo-Mitsubishi UFJ will apparently complete the deal with VietinBank by the first half of 2013. The move is in line with the bank's grand plan to spend over $12 billion in the next three years on overseas acquisitions, and illustrates the increasing number of Japanese outbound M&As. Certain estimates suggest that Japanese firms have spent $83.8 billion on outbound M&As in the current year.
Recent trends indicate Vietnam has been a highly preferred destination for Japanese banks. For instance, the VietinBank deal was preceded by Mizuho Financial Group Inc's $760 million acquisition last year of 15 percent of Vietcombank, or The Bank for Foreign Trade of Vietnam, and Sumitomo Mitsui Financial Group Inc's $225 million purchase of a 15 percent stake in Vietnam Export Import Bank in 2008.
Meanwhile, MUFJ has also agreed to buy out Bank of America (BofA) Merrill Lynch's 49 percent stake in Mitsubishi UFJ Merrill Lynch PB Securities Co for an estimated $480 million. Reports say that MUFJ's growing interest in Merrill stake was anticipated from the time MUFG invested in Morgan Stanley in 2008, taking a 22 percent stake in the firm.
Join the Conversation