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INVESTMENT BANKING | Staff Reporter, Japan
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Japanese banks on M&A binge in Europe

The strong yen is making Europe a profitable hunting ground for leading Japanese banks bent on mergers & acquisitions.

Among the newest hunters is Sumitomo Mitsui Trust Holdings Inc., Japan’s fourth-biggest bank by market value. It intends to spend some US$129 million to buy a European asset management company.

The acquisitions will enable Sumitomo Mitsui to boost assets under management by seven percent to US$821 million by March 2016, Hitoshi Tsunekage, chairman of the company, said in an interview.

The purchase of foreign assets by Japanese companies has been fueled, in part, by the yen’s strength against other major currencies. Japanese acquisitions abroad have climbed to about $88 billion this year, the most in any of the 12 years for which Bloomberg data is available.

“Doldrums in Europe and the stronger yen are pushing acquisition costs down to attractive levels and providing us with a better investment environment,” he said. “There are many well-performing asset management firms in the U.K.,” he said without elaborating on a specific target.

An acquisition would follow Sumitomo Mitsui’s US53.9 million purchase of a 40% stake in London-based asset manager NewSmith LLP. Europe’s debt crisis has increased the risk of government and bank defaults across the region, raised credit costs and pushed banks to sell assets to boost capital.

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