Mitsubishi UFJ Financial Group (MUFG) today announced it has agreed to offload the personal banking arm of its U.S. regional bank MUFG Union Bank to U.S. Bancorp, the largest regional bank in the country, in a deal worth around $7.3 billion (800 billion yen). MUFG Union Bank’s sale to Bancorp comes as the retail banking division reviewing its business structure amid lower interest rates and increasing costs from brick-and-mortar operations.
MUFG Union Bank has remained central of North American operations, along with the Japanese financial conglomerate’s stake in Morgan Stanley. As per terms of the MUFG – Bancorp deal, MUFG is likely to receive cash and U.S. Bancorp shares. It is also likely to enter into a capital alliance with Bancorp.
The total amount of cash to be received as part of MUFG Union Bank’s sale to Bancorp is $7.3 billion (800 billion yen). Mitsubishi UFJ Financial Group has already notified Japan’s financial watchdog about the sale.
“With MUFG Union Bank, we will increase access to state-of-the-art financial products while maintaining U.S. Bank’s strong track record of putting its customers and communities first,” said Andy Cecere, chairman, president and chief executive officer of U.S. Bancorp. “We are also committed to maintaining both organizations’ excellent records of serving low-income communities and supporting minority-led institutions,” he continued.
The MUFG Union Bank has around 300 brick-and-mortar stores, mainly on the West Coast. It was acquired by the former Bank of Tokyo and the former Bank of Mitsubishi in the ‘80s. In 1996 it became to be known as the Bank of California.
After the 2008 Great Recession, Mitsubishi UFJ made Union Bank a wholly owned subsidiary through a takeover bid. MUFG Union Bank is currently the 27th largest bank in the U.S. with $133 billion in assets. The bank has a rich history of more than 150 years, and offers full banking functions, ranging from home loans to other services for personal to corporate loans.
Mitsubishi UFG has strived to make its retail banking unit a strong pillar of growth in North America. However, it was hit with several challenges during the shift towards digitalization. The bank also operated on thinner profit margins as low interest rates provided little to no growth opportunities.
“We are very pleased to have reached this agreement which will allow MUFG to focus and increase our resources on accelerating growth in our Americas wholesale businesses – specifically our corporate and investment banking, global markets, Japanese corporate banking and transaction banking businesses,” said Kevin Cronin, MUFG Regional Executive for the Americas and CEO of MUFG Americas Holdings Corporation and MUFG Union Bank, N.A.
