Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, may focus more on transactional banking and asset management as new capital rules make lending businesses less attractive, Deputy President Nobuyuki Hirano said.
“The new risk-weighted asset structure will have some negative impact on lending,” Hirano said Friday at Bloomberg headquarters in New York. “We need to fine tune our business model, not only putting our resources into lending, but also we need to share our resources to transaction banking, which doesn’t require more capital, and we’d like to focus more on flow-based client market businesses.”
The Basel Committee on Banking Supervision said last month the world’s most important lenders must hold as much as 2.5 percentage points in extra capital to prevent a repeat of the financial crisis. Mitsubishi UFJ won’t likely be included in the top group of global systemically important banks, Hirano said.
“There’s pain for every institution, but we are prepared and we are prepared to accept the appropriate level of surcharge,” Hirano said. He said the bank will likely be required to hold a buffer that’s “reasonable for us to digest.”
The lender is also looking to expand its asset-management business as it sees opportunity in the aging global population, Hirano said. The firm owns a stake in Aberdeen Asset Management PLC, the U.K.’s biggest independent fund manager, and could explore partnership opportunities with Morgan Stanley, with which it has a lending agreement and is the biggest common shareholder, Hirano said.
“We are one of the big players already in Japan, but our global presence in the asset management area is somewhat behind,” he said. “We believe that’s a growing and promising industry, in particular given the new Basel framework.”
Mitsubishi UFJ will receive the most stringent capital requirements among Japan’s lenders because of its international scope, analysts at Goldman Sachs Group Inc. wrote in a June 27 report. The Japanese bank, which raised its stake in Morgan Stanley to 22 percent this year, would be subject to a 1.5 percentage-point capital buffer, the note said.
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