The Mitsubishi UFJ Financial Group Inc. debuted Saturday as the world's biggest bank, surpassing U.S.-based Citigroup in assets through the merger of Japan's second- and fourth-largest financial institutions.
Mitsubishi Tokyo Financial Group Inc. won a protracted takeover battle against rival suitor Sumitomo Mitsui to buy No. 4 UFJ Holdings Inc. in a stock swap valued at 3.4 trillion yen ($30.1 billion) when shareholders approved the deal in June.
The firms combined holding companies Saturday, but their commercial banking operations will merge on Jan. 1 after a delay caused by linking their computer systems. The new Tokyo-based Mitsubishi UFJ has total assets of around 190 trillion ($1.68 trillion), topping U.S.-based Citigroup Inc.'s $1.55 trillion, based on most recent company figures.
The takeover reduces Japan's Big Four banks to three and symbolizes the recovery of a banking industry once buried in bad debt. The bank plans to benefit by combining Mitsubishi Tokyo's international reach with UFJ's strength in retail banking, especially in western Japan.
Mitsubishi Tokyo and UFJ posted a combined net loss of 139.3 billion yen ($1.23 billion) in the year through March.
But adding individual outlooks gives the new company a joint profit of 735 billion yen ($6.5 billion) in the current year to March 2006, while together they are forecasting net income of 1.1 trillion yen ($9.7 billion) for the year to March 2009.
On Wednesday, Mitsubishi UFJ said it would pair with Merrill Lynch & Co. to set up a securities company targeting rich investors starting in 2006.
Mitsubishi UFJ may not be Japan's biggest bank for long.
Prime Minister Junichiro Koizumi plans to privatize the nation's postal system, which has 330 trillion yen ($2.92 trillion) in savings and insurance deposits and 24,700 offices around the country. That process, if approved by parliament, would begin in 2007 and could pose a retail banking threat to the likes of Mitsubishi UFJ.
