The Acquisition Bid for UFJ Holdings
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Case Code: BSTR133 Case Length: 17 Pages Period: 2000 - 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Sumitomo Mitsui Financial Group, UFJ Holdings Industry: Banking Countries: Japan Themes: Mergers Acquisition and Takeovers |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background Note
UFJ Holdings
Headquartered in Osaka, the UFJ Group came into existence in April 2001 after the merger of Sanwa Bank, Tokai Bank and Toyo Trust. Sanwa Bank had an extensive branch network in the Tokyo and Osaka regions. It was known for providing innovative financial services and had a well-established service network, especially in Asia. The bank had a diverse customer base ranging from retail to multinational corporations. Tokai Bank was a leading bank in the Nagoya region and had a strong presence in Tokyo and Osaka too. The bank had a good presence in many key Asian markets and specialized in serving the needs of middle-market companies. Toyo Trust was a well recognized entity in Japan's asset management business and specialized in both trust and banking operations. The UFJ Group was ranked 14th in the world among banks in terms of assets and 392 among the Financial Times 'Global 500' companies.
The group's operations were broadly classified into retail banking, corporate banking, global banking and trading, trust operations, securities and investment banking and asset management. It had established a wide network covering the US, Canada, Europe, the Middle East and Oceania. Retail banking was UFJ's core business with a thrust on providing housing and consumer loans. The corporate division catered to the needs of medium and small companies and offered services like processing payments and settlements through electronic banking, sale of derivatives and corporate finance services like loan syndication and asset securitization, cash management, payroll and settlement related services.
The trust operations included real estate services, corporate agency services, pension and inheritance related services to individuals. UFJ had been reporting significant losses for the past three fiscal years (2002-04) (Refer Table I and Exhibit III for the financial performance of UFJ). The bank was witnessing declining revenues and increasing NPAs. UFJ was also well behind the time schedule given by the Financial Services Agency (FSA), Japan's banking regulator, to reduce non-performing loans and come out of its financial crisis. Merger with a stronger bank was considered necessary for this...
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