Japan's MUFG to sell part of U.S. unit to US Bancorp for $8 billion

Signboards of MUFG Bank are seen in Tokyo, Japan April 3, 2018. REUTERS/Toru Hanai/Files

TOKYO (Reuters) -Mitsubishi UFJ Financial Group (MUFG) said it has agreed to sell the personal banking arm of its U.S. unit MUFG Union Bank to US Bancorp in a cash and stock deal worth $8 billion.

The payment will include $5.5 billion in cash and 44 million US Bancorp shares, or a 2.9% stake, that will allow it to forge a capital alliance with the Japan’s biggest lender, the banks said in a press release. The deal is expected to close by the end of June next year, they added.

Bloomberg reported the possible sale of MUFG Union Bank last week – a move that would mark a significant strategy shift for a lender that has had a presence in the United States for decades, but has recently said it wants to focus more on Asia.

Japanese banks, including MUFG, have looked to expand overseas in a bid to boost profits because ultra-low interest rates and a shrinking population in Japan have made it difficult to increase earnings at home.

MUFG Union Bank had around 300 branches as of the end of last year, with most of those retail branches on the West Coast of the United States, its website shows.

With assets of $132 billion, it provides corporate, commercial and retail banking as well as wealth management. It became a wholly owned unit of Mitsubishi UFJ in 2008, when the Japanese lender paid around $3.5 billion for the third it did not already control.

MUFG Union Bank will keep its corporate and investment banking business and some administrative operations.

Japanese parent MUFG also owns a fifth of Wall Street investment bank Morgan Stanley.

($1 = 109.5700 yen)

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