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Mitsubishi UFJ Financial Group, Inc. Message Board

  • bluecheese4u bluecheese4u Dec 19, 2007 11:28 PM Flag

    Mitsubishi UFJ May Support U.S. Subprime Bailout Fund (Update1)

    Mitsubishi UFJ May Support U.S. Subprime Bailout Fund (Update1)

    By Finbarr Flynn

    Dec. 20 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, is still considering a request to contribute to a U.S. fund to bail out investments threatened by subprime loan defaults.

    ``It's true that there has been a request,'' said Yusuke Fukui, a spokesman at the Tokyo-based company, which also controls a bank in California. ``We are still considering the request from a business perspective and its economic rationale.''

    Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. agreed in October to set up a fund to revive the market for asset-backed commercial paper by buying assets from so-called structured investment vehicles. Global banks including Citigroup and HSBC Holdings Plc have said they will rescue bank-related vehicles by taking over their assets.

    ``Mitsubishi UFJ has the Union Bank of California among its subsidiaries, so they will probably put some money in,'' said Hiromichi Tsuyukubo, who helps manage about $800 million at Myojo Asset Management Japan Co. in Tokyo. ``There is no merit for Japanese banks to invest in SIVs with subprime loans.''

    The Nikkei newspaper reported today that Mitsubishi UFJ, and its two largest competitors, Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., won't contribute to the U.S. fund to bail out structured investment vehicle debt, without saying how it obtained the information.

    Shares in Mitsubishi UFJ were 2.5 percent higher at 542,000 yen as of 12:50 p.m. in Tokyo.

    Subprime Fallout

    Mitsubishi UFJ owns 65 percent of UnionBanCal Corp., the holding company for Union Bank of California, according to Bloomberg data. Union Bank has about 320 branches.

    Masako Shiono, a spokeswoman at Mizuho, declined to comment on whether the bank had received a request for a contribution to the support fund. Sumitomo Mitsui said on Dec. 12 it was considering a request for financial assistance from the U.S. fund. Tetsu Morishima, a spokesman for the Tokyo-based bank, declined to comment today on whether the bank will contribute.

    The SIV rescue fund, supported by U.S. Treasury Secretary Henry Paulson, is one of two private-sector efforts fostered by the Bush administration to address the fallout from subprime- mortgage delinquencies, which reached a 20-year high in the third quarter, according to data from the Mortgage Bankers Association.

    SIVs were unable to finance themselves as subprime losses prompted investors to retreat from all but the safest of securities. Three SIVs have defaulted and others are being bailed out by their sponsors. The world's 30 SIVs have about $300 billion of assets. SIVs sell short-term debt and invest the proceeds in higher-yielding securities.

    Citigroup Inc. said last week it will take over seven troubled SIVs and assume $58 billion of debt to rescue the funds. HSBC Holdings Plc said last month it'll take on $45 billion of SIV assets to avoid a fire sale.

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