What to do with US$120 billion in Eurozone assets?

Mitsubishi UFJ Financial Group ponders what it needs from among US$120 billion in unwanted European assets on its doorstep.

MUFG is Japan's largest financial group and the world's second largest bank holding company.

MUFG had been approached by banks in France, Germany, Spain, Italy and the UK to acquire these unwanted assets, said Takashi Morimura, head of the group’s global banking operations. He said, however, that only a small fraction of the assets offered has caught the interest of MUFG.

Europe’s banks are downsizing as commercial financing dries-up, especially dollar-denominated funds. They are also under pressure to build capital levels to meet a June deadline for higher ratios imposed by the European Banking Authority.

“If we find interesting project finance and securitisation portfolios in the Eurozone, that would be very good,” Morimura said.

MUFG’s new European push is part of a strategy to diversify away from a slow growing domestic Japanese market. MUFG is a latecomer to the present wave of Japanese mergers and acquisitions sweeping Europe. Its last European acquisition came in 2010.

Morimura said the plan to buy up asset portfolios was one of three strategic priorities for MUFG’s global business. Other aims are to expand the bank’s US commercial banking franchise and grow its Asian presence outside Japan.