The Bank of Tokyo-Mitsubishi and Mitsubishi Trust & Banking Corp. on Wednesday announced the terms for the April consolidation of their units under a single holding company, a move that will form the nation’s fourth-largest banking group.
The two will enter the alliance along with Bank of Tokyo-Mitsubishi subsidiary Nippon Trust Bank. Under the agreement, 1,000 Bank of Tokyo-Mitsubishi shares will purchase one share of the new holding company, while the same number of Mitsubishi Trust shares and Nippon Trust shares will be respectively worth 0.70 shares and 0.14 shares of the new unit.
The conglomerate, to be named Mitsubishi Tokyo Financial Group, Inc., will be capitalized at almost 1.15 trillion yen and will have combined assets of 76.7 trillion yen.
“In terms of capital volume, (Japanese banks) are extremely large,” said Tokyo-Mitsubishi President Shigemitsu Miki in a news conference. “What still needs to be done — this holds for all of Japan — is to further improve earnings. In business expansion, we need to address how we are going to tackle stock and insurance (products).”
Miki said that the group was considering entering the stock and insurance sector “eventually,” but not immediately.
“Tokyo-Mitsubishi Securities Co. handles stocks but we need to consider whether this is enough,” he said.
Miki will serve as president of the holding company and Mitsubishi Trust President Akio Utsumi will serve as chairman.
The holding company aims to increase its gross profit margin of 1.6 trillion yen in fiscal 1999 to 4.08 trillion yen in fiscal 2003, and to boost its return on equity from 5.2 percent in fiscal 1999 to 12 percent in fiscal 2003.
The two companies also announced that Kokei Higuchi, president of Tokio Marine & Fire Insurance Co., and Ryotaro Kaneko, president of Meiji Life Insurance Co. — both Mitsubishi group financial companies — will serve as board members.
Major banks are now consolidated into four main groups. Apart from the one to be created by the Mitsubishi group, they are: the Mizuho Financial Group, to be set up later this month through the integration of Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan; the camp created by the merger of Sumitomo and Sakura banks; and a banking group that will band together Sanwa Bank, Tokai Bank and Asahi Bank.
“We are the most fiscally sound bank in Japan,” Miki boasted. “We will be the first to reach an ROE of 12 percent.”
He said that Tokyo-Mitsubishi will invest roughly 480 billion yen in information technology over the next four years, with Mitsubishi Trust looking at over 100 billion yen.
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