Mitsubishi UFJ Financial Group Inc. plans to turn Mitsubishi UFJ Securities Co., a group brokerage, into a wholly owned subsidiary, MUFG said Tuesday.

MUFG aims to enhance profitability as an all-around financial group dealing in a wide array of products and services by more closely integrating the brokerage unit into its operations.

MUFG, the world’s largest banking group by assets, owned a 61.23 percent interest in Mitsubishi UFJ Securities as of the end of this March. It plans to acquire the remainder of the shares in a stock swap with the brokerage firm, it said.

Toyota Motor Corp., the second-largest shareholder in the securities house, with a 3.84 percent stake, is expected to agree to the swap, MUFG sources said.

The group hopes to complete the transaction by the end of March. Further specifics on the equity swap, including the swap ratio, will be worked out after the group performs due diligence on the securities firm’s assets and monitors its stock price movements, MUFG said.

Mitsubishi UFJ Securities, a midsize brokerage, aims to expand dealings with corporate clients and bolster investment banking operations abroad under MUFG’s fold.

MUFG’s latest move comes as the boundary between the banking and securities sectors blurs amid deregulation in the industry.

Financial institutions, on the other hand, are being compelled to meet the increasingly diverse funding, investment and other needs of both corporate and individual clients straddling the two fields.

Banks are also eyeing the high-margin securities business as a potentially better growth engine in comparison with loan operations.

They also need securities houses’ expertise to hone their investment skills, which are expected to be vital when interest rates begin rising in the wake of the Bank of Japan’s decision to end its “zero-interest-rate” policy.

Deals similar to MUFG’s were struck earlier this year between Sumitomo Mitsui Financial Group Inc. and SMBC Friend Securities Co., and between Sony Bank and Kaiyo Securities Co., possibly sparking a trend among banks.

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