Mitsubishi UFJ said to have held talks to acquire DZ Bank's DVB

Mitsubishi UFJ Financial Group Inc., the nation’s biggest bank, held talks with DVB Bank SE about a possible takeover of the German shipping and aviation lender, sources said.

Negotiations over the potential acquisition of the Frankfurt-based bank, which is majority owned by cooperative lender DZ Bank AG, ended in December without an agreement, the people said, asking not to be identified. A second Japanese bank also held talks, two of the people said, but they declined to name the lender.

The discussions fell apart due to disagreements about deal structure, one of the people said. The Japanese firms wanted to acquire a minority stake with the option of buying the rest later, which was not favored by DZ Bank as it would continue to have funding commitments, the person said.

Japanese banks are expanding abroad as a shrinking population and near-zero benchmark interest rates make lending at home less profitable. Mitsubishi UFJ bought a controlling stake in Thailand’s Bank of Ayudhya Pcl for about $5.5 billion in 2013, data compiled by Bloomberg show, and integrated its U.S. operations under a single holding company last year as it seeks to become a top-10 bank there.

While DVB Bank’s ship and aircraft financing expertise were attractive to Mitsubishi UFJ, the Tokyo-based lender is now focusing on further acquisitions in Asia and expansion in the U.S., another person said. Spokesmen for Mitsubishi UFJ and DZ Bank declined to comment, while DVB Bank couldn’t immediately be reached.

DVB Bank has a market value of about €1.1 billion ($1.3 billion). Its revenue in 2013 was €5.1 billion, according to its website.

Overseas lending at Mitsubishi UFJ rose by 25 percent in the year ended September, according to the company’s financial report.