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Hedge fund redemptions tune Mitsubishi UFJ takeover engine

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Redemption requests totalling US$2.5 billion have been submitted by Bank of Tokyo-Mitsubishi UFJ to funds of funds managed by BlackRock, Grosvenor Capital, Mesirow and UBS, according to Hedge Fund Alert.

The publication quotes “a Tokyo-based broker-dealer” as suggesting that the move was prompted by uncertainties about how banks’ capital will be measured under the international Basel III agreement and the US Dodd-Frank Act.

Japan’s financial crises run counter-cyclically to those elsewhere and, following the years of perpetual consolidation from 1995, the country’s five remaining banking giants are tuning up to use their re-established speed and power on acquiring institutions overseas.

While the Basel III recommendations will not even begin to be phased in until 2013, this quintet will not want to waste time on addressing foreign regulators’ concerns about their capital once they identify an acquisition that fits and the strong yen stays on their side.

Bank of Tokyo-Mitsubishi UFJ is Japan’s largest bank and part of Mitsubishi UFJ Financial Group, the biggest of the giants. In November last year the parent acquired Royal Bank of Scotland’s Australia-based infrastructure advisory business and in December its trust banking unit bought 15% of AMP Ltd, the Australian asset management firm (see posting below Mitsubishi UFJ rolls right on and into Oz). The Group has owned over 20% of Morgan Stanley since October 2008.

Deputy president Tatsuo Tanaka could not have been clearer when he told reporters from Bloomberg this month that the bank aimed to be among Asia’s three biggest lenders by profit and to achieve that by making acquisitions and expanding retail banking as well as  funding infrastructure projects.

To attain this acceleration smoothly it needs to get rid itself of any potential drag.

So too will its four competitors which will find taking similar decisions easy now that MUFJ FG has led the way.

The bank’s redemption requests, according to Hedge Fund Alert, are for the full amounts  invested with the funds of funds of BlackRock, Grosvenor Capital (known as GCM Investments in Japan) and Mesirow and part of that with UBS. It will still have about US$500 million of its capital with Blackstone and UBS.

© 2012 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.


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