World's Biggest Bank Opens in JapanWorld's Biggest Bank Opens in Japan
Tuesday January 3, 9:44 pm ET
By Yuri Kageyama, AP Business Writer
World's Biggest Bank Opens for Business in Japan With a Tape-Cutting Ceremony
TOKYO (AP) -- The Bank of Tokyo-Mitsubishi UFJ, which just became the world's largest bank, opened for business Wednesday with a tape-cutting ceremony at Tokyo headquarters.
The merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. was completed Sunday, creating the world's largest financial group by assets at around 190 trillion yen ($1.6 trillion), topping U.S.-based Citigroup Inc.'s $1.55 trillion, based on the most recent company figures.
The Japanese financial giants merged Oct. 1 to become Mitsubishi UFJ Financial Group Inc., but the merger of the group's core banks had been pushed back as engineers rushed to integrate their computer systems and automated teller machines.
Bank of Tokyo-Mitsubishi UFJ President Nobuo Kuroyanagi said the new bank still needs to boost profitability and develop attractive investment products if it hopes to keep abreast of global competition.
"I'm not sure we should be talking about our weaknesses on our first day of opening for business," he said after cutting a red ribbon with huge scissors with two other officials in the lobby. "It's a fact that we are lacking in profitability."
But he said his bank hopes to control about 50 percent market share for Japanese companies doing business in Asia.
The banks' computer systems are not totally unified yet although they are linked up, and it's still undecided when the complete integration will take place, Kuroyanagi said.
The bank is being cautious after a similar merger effort about two years ago by rival Mizuho proved a disaster when a spate of computer glitches caused its ATMs across the nation to go off-line, causing double-billings on credit card purchases and stalling bill payments, cash transfers and withdrawals.
The bank's birth is the latest development in a continuing realignment of this nation's banking sector, which has in recent years been slowly recovering from massive bad loans that had piled up during a decade-long economic slowdown.
But some analysts are skeptical about whether size alone will help Japanese banks, pointing out that Bank of Tokyo-Mitsubishi UFJ will be going up against the likes of Citigroup and HSBC Holdings PLC.
"Size is often accompanied with a lack of focus and a slowness that results in losing touch with what the customers really need," Fariborz Ghadar, director of the Center for Global Business Studies at Pennsylvania State University, said in an e-mail.
Fitch Ratings said Wednesday it has upgraded the outlook for Bank of Tokyo-Mitsubishi UFJ to positive from stable, reflecting that the assets and capitalization of the combined bank could lead to a rating upgrade.
The Bank of Tokyo-Mitsubishi UFJ is among the three big banks that now dominate retail banking in Japan, including Mizuho Bank, and Sumitomo Mitsui Banking Corp.
Mizuho's parent group, Mizuho Financial Group Inc., was established in 2000 from the integration of the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank, while Sumitomo is the core bank of Sumitomo Mitsui Financial Group Inc., created in 2001 through the merger of Sumitomo Bank and Sakura Bank.
Mitsubishi UFJ Financial Group posted strong earnings in November due to lower bad-loan write-off costs, and expects to earn a group net profit of 520 billion yen ($4.4 billion) for the fiscal year through March 31, 2006.
Other banks are also posting healthy results, the latest indication that Japan's financial sector is on the mend after years of losses.
Separately Wednesday, major Japanese newspaper Yomiuri reported that Bank of Tokyo-Mitsubishi UFJ has begun talks with the Bank of China to invest in China's second-largest commercial bank. The deal would represent the first capital tie-up between a major Japanese bank and a Chinese commercial bank. Bank officials said no decision has been made.