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Mitsubishi UFJ Closes Colonial First State Group Limited Deal

Zacks Equity Research

Mitsubishi UFJ Trust and Banking Corporation (“the Trust Bank”), a consolidated subsidiary of Mitsubishi UFJ Financial Group MUFG, has completed the acquisition of shares of nine subsidiaries of Colonial First State Group Limited from Australian financial group Commonwealth Bank of Australia and its wholly-owned subsidiary Colonial First State Group Limited.

Notably, Colonial First State Group Limited, along with its subsidiaries, signifies the global asset management business of Colonial First State Global Asset Management (“CFSGAM”). The global investment management business of CFSGAM is aided by more than 800 professionals. These persons handle asset classes, including equities, bonds, alternatives and multi-asset funds. Moreover, CFSGAM works with a huge client base expanding across Oceania, Asia, Europe and North America.

Per the terms, the Trust Bank has acquired CFSGAM in a cash-deal of about A$4 billion (JPY328 billion). Notably, last month, the parties received all the regulatory approvals for the deal’s completion.

Per Mitsubishi UFJ’s Medium-term Business Plan (2018-2021), the bank targets to be “The unparalleled industry leader in Japan as well as a global player boasting significant presence overseas”. Therefore, the latest acquisition will enhance the bank’s asset management capabilities and product competitiveness, aiding it along with CFSGAM to deliver value services to existing and future clients.

The bank completed the merger of its consolidated subsidiaries, PT Bank Danamon Indonesia, Tbk (Bank Danamon) and PT Bank Nusantara Parahyangan Tbk. (Bank BNP) on May 1. Post-merger, Mitsubishi UFJ holds a 94.1% stake in Bank Danamon.

In March 2019, the bank entered into an agreement with DVB Bank SE to purchase DVB’s Aviation Finance division. This transaction is expected to conclude during the second half of this year.

Therefore, Mitsubishi UFJ seems focused on building its global presence through these strategic efforts. Notably, its strong capital position supports such expansion strategies. However, net interest income continues to remain under pressure due to low domestic interest rates.

Over the past six months, this Zacks Rank #2 (Buy) stock has lost nearly 9.2% on the NYSE, compared with the industry’s decline of 5%.

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