Shareholders of Mitsubishi Tokyo Financial Group (MTFG) and UFJ Holdings approved Mitsubishi Tokyo's acquisition of UFJ, paving the way...
TOKYO — Shareholders of Mitsubishi Tokyo Financial Group (MTFG) and UFJ Holdings approved Mitsubishi Tokyo’s acquisition of UFJ, paving the way for the creation of the world’s largest banking group by assets.
Mitsubishi Tokyo, Japan’s second-largest bank, will absorb UFJ, the nation’s fourth-largest bank, on Oct. 1, creating an institution with assets of about $1.77 trillion, surpassing U.S. financial giant Citigroup.
Many foreign institutional investors, who hold about 30 percent of UFJ shares, initially had doubts about the planned merger amid a persistent bid from Sumitomo Mitsui Financial Group to merge with UFJ.
Mitsubishi Tokyo and UFJ announced the merger ratio in February, under which one UFJ share will be exchanged for 0.62 Mitsubishi Tokyo share.
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Banking analysts say that share ratio was generally appropriate.
Sumitomo Mitsui withdrew its merger bid, ending an unprecedented takeover battle in the Japanese banking industry.
At the UFJ meeting, President Ryosuke Tamakoshi apologized for posting four straight years of net losses and for getting slapped with government penalties for wrongdoing such as evading inspections by regulators. But he said UFJ’s financial standing has improved as the bank accelerates bad-loan write-offs.
Asked why UFJ turned down Sumitomo Mitsui’s merger proposal, UFJ officials said the bank judged it best to merge with Mitsubishi Tokyo due to MTFG’s clean balance sheet and high quality of capital. The two banks also complement each other in their businesses and geography, they said.
“A merger with MTFG will be most beneficial for UFJ shareholders,” Tamakoshi said, adding that merger preparations are proceeding smoothly.
In a meeting that lasted nearly three hours, angry shareholders grilled Tamakoshi and other bank executives for evading inspections by regulators. Several senior UFJ officials were arrested for violation of Japan’s banking law, and the officials and the bank have already admitted wrongdoing last year.
Tamakoshi said UFJ is strengthening its compliance with the law and corporate governance.
In a separate meeting earlier yesterday, MTFG shareholders approved the bank’s proposed merger with UFJ.