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MTU Seeks to Acquire MS Trust Biz

Zacks Equity Research

In order to expand its operations, Japan-based Mitsubishi UFJ Financial Group, Inc.’s (MTU) U.S.-based subsidiary – UnionBanCal Corporation – is seeking to acquire the rights to sell trust-banking services to Morgan Stanley’s (MS) clients. The proposed business to be acquired offers trust services for approximately $4 billion worth of client assets.

The trust services business offers fiduciary and administrative services for high net worth clients who plan to set up personal trusts. Morgan Stanley will continue to manage the client assets, while Mitsubishi UFJ will earn fees from the sale of trust services to the clients.

Mitsubishi UFJ’s primary intention behind the proposed deal is to augment revenues to somewhat offset the persistent lower loan demand in Japan. The company has been growing inorganically over the last few years. Earlier in Apr 2013, UnionBanCal announced a deal to acquire commercial real estate (:CRE) lending portfolio and platform from PB Capital Corporation – a wholly owned subsidiary of Deutsche Bank AG (DB).

Moreover, in Dec 2012, Mitsubishi UFJ purchased the remaining 49% stake in joint venture (:JV) with Bank of America Corp. (BAC), enabling it to further improve its relationship with Morgan Stanley, with whom it has 3 separate JVs. Hence, the above-mentioned proposed deal will add strength to Mitsubishi UFJ’s relationship with Morgan Stanley.

For Morgan Stanley, which has been trying to consolidate its global operations and concentrate on brokerage operations, the deal if finalized would be a positive step. In Mar 2013, it announced plans to restructure its Europe, the Middle East and Asia (:EMEA) Private Wealth Management (:PWM) business. Additionally, the company agreed to sell its EMEA PWM businesses in the U.K., U.A.E., and Italy to Credit Suisse.

Mitsubishi UFJ currently carries a Zacks Rank #3 (Hold).

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