U.S. Markets close in 3 hrs 59 mins
  • S&P 500

    4,631.66
    +64.66 (+1.42%)
     
  • Dow 30

    34,827.74
    +344.02 (+1.00%)
     
  • Nasdaq

    15,710.50
    +172.81 (+1.11%)
     
  • Russell 2000

    2,242.61
    +43.70 (+1.99%)
     
  • Crude Oil

    67.61
    +1.43 (+2.16%)
     
  • Gold

    1,784.20
    +7.70 (+0.43%)
     
  • Silver

    22.45
    -0.36 (-1.58%)
     
  • EUR/USD

    1.1326
    -0.0013 (-0.1133%)
     
  • 10-Yr Bond

    1.4730
    +0.0300 (+2.08%)
     
  • Vix

    22.84
    -4.35 (-16.00%)
     
  • GBP/USD

    1.3309
    +0.0008 (+0.0586%)
     
  • USD/JPY

    112.8390
    -0.3410 (-0.3013%)
     
  • BTC-USD

    58,475.34
    +1,598.54 (+2.81%)
     
  • CMC Crypto 200

    1,490.36
    +21.28 (+1.45%)
     
  • FTSE 100

    7,168.68
    +109.23 (+1.55%)
     
  • Nikkei 225

    27,935.62
    +113.86 (+0.41%)
     

Mitsubishi UFJ (MUFG) Mulling Divesture of U.S. Banking Arm

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Mitsubishi UFG MUFG is planning to offload its U.S. banking business, MUFG Union Bank, per a Bloomberg article. Citing people familiar with the matter, the article reported that the company is working with an advisor to explore its options. This move comes about 13 years after Mitsubishi UFG acquired the West Coast lender for $3.5 billion to boost its presence in the country.

This is part of the Japanese bank’s strategy to better compete with the industry biggies and financial technology lenders, as the U.S. regional banks are increasingly pursuing to pair up in the competitive market.

Per the article, the Japan-based bank has had unofficial preliminary conversations with budding buyers but has not initiated any formal auction. Further, no final decision has been taken and there’s no surety that the deliberations will lead to a final transaction.

MUFG Union Bank has more than 300 branches, largely located on the West Coast. It currently has assets worth roughly $132 billion, and provides retail banking, wealth management, corporate and commercial banking services.
Over the years, Mitsubishi UFG has been expanding inorganically and continues to pursue its global growth opportunities. Since 2016, the bank has completed a number of acquisitions to expand its footprint globally.

In addition, the company is focused on its updated Medium-term Business Plan (2021 to 2023) that includes the upgradation and reformation of its business model, and the exploration of new business areas. In this regard, Mitsubishi UFG has implemented the “Eleven Transformation Initiatives”, which are specific strategic initiatives designed to help it cope with the adverse changes in the domestic or overseas business environment, and achieve sustainable growth.

However, the company has been facing challenges in controlling costs. Also, negative interest rates in Japan and strict regulations are concerns.
Shares of the company have lost 2.3% in the past six months, against 1% growth of the industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, many regional banks in the United States are undertaking restructuring initiatives, as part of their plan to maximize profits amid the low rate environment. In continuation with its efforts to boost returns by streamlining operations internationally, Citigroup Inc. C signed a deal in August to sell its Australian consumer business unit to National Australia Bank for $882.24 million.

Earlier this month, Cadence Bancorporation CADE entered into an agreement to divest its seven branches in Northeast Mississippi to The First, A National Banking Association, subsidiary of The First Bancshares, Inc. FBMS. This is in line with the joint Letter of Agreement signed between Cadence and BancorpSouth with the United States Department of Justice’s Antitrust Division in relation to the pending merger of BancorpSouth and Cadence.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Citigroup Inc. (C) : Free Stock Analysis Report

The First Bancshares, Inc. (FBMS) : Free Stock Analysis Report

Cadence Bancorp (CADE) : Free Stock Analysis Report

Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report

To read this article on Zacks.com click here.