Sumitomo Trust & Banking Co. sought a court order Thursday to halt negotiations between UFJ Holdings Inc. and Mitsubishi Tokyo Financial Group Inc. on merging their trust banking operations.
Sumitomo Trust lodged the suit with the Tokyo District Court because UFJ Holdings, after deciding to merge with MTFG, scrapped a May agreement to sell UFJ Trust Bank to Sumitomo Trust.
Sumitomo Trust said it will seek some 100 billion yen in damages for UFJ’s move if its demand for a halt to UFJ-Mitsubishi Tokyo talks is not accepted.
In late August, the Supreme Court turned down Sumitomo Trust’s request for a provisional injunction against UFJ-MTFG talks to integrate their trust units.
UFJ Holdings and MTFG reached a basic accord for a comprehensive merger on Aug. 12 in a deal that will create the world’s largest banking group, with assets of 190 trillion yen. They aim to merge next October.
UFJ, encumbered by massive losses stemming from bad loans, had agreed in May to sell its trust unit, UFJ Trust Bank, to Sumitomo Trust for 300 billion yen.
But it reversed course in July, instead seeking a merger with MTFG and reneging on the UFJ Trust deal, saying its rehabilitation would be unsatisfactory with a business alliance only in the trust division.
On July 27, the Tokyo District Court issued a preliminary order to discontinue the trust business part of the merger discussions. The same court turned down UFJ’s appeal against the order on Aug. 4.
But on Aug. 11, the Tokyo High Court repealed the lower court ruling, allowing UFJ and MTFG to resume merger talks. Sumitomo Trust immediately appealed to the Supreme Court.
On Aug. 30, the top court gave the go-ahead to merger negotiations between UFJ Holdings and MTFG.
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