When we learned of it (after the fact), we thought the highly secretive gathering of top executives of Morgan Stanley and MUFG at the swanky Ritz-Carlton Hotel in Tokyo some days ago was all about MUFG’s agreement to invest $9bn in the US investment bank in exchange for a 21 per cent equity stake.
But there was more.
It emerged Friday afternoon that MUFG, Japan’s biggest bank, is planning to merge its brokerage unit with a local subsidiary of Morgan Stanley, thereby creating one of Japan’s largest securities firms.
The deal, first reported Friday afternoon by Japan’s national broadcaster NHK on its website, brought forth another fine example of Japan’s gentle art of denial. NHK’s report was initially shot down by a spokesman for Tokyo-based MUFG, reported Bloomberg. At the same time MUFG said in a statement to the Tokyo Stock Exchange it would decide the details of its capital alliance with Morgan Stanley by the end of June.
In subsequent remarks, spokesmen for both banks said no decision had yet been made. “Nothing concrete has been decided,” a Tokyo-based spokeswoman for Morgan Stanley told Bloomberg, adding that the company “is looking forward to continuing discussions over all the options to maximise the strategic benefits of the global alliance'’ with MUFG.
But NHK, which is rarely wrong on such matters, said the two sides had “agreed in principle to set up a securities company which would be at the top-level in Japan and target domestic corporate customers”, though the timing and other details of the deal hadn’t been decided.
Finally, hours after denying the NHK report, MUFG changed its mind and issued a statement saying it “would consider” merging its investment banking unit with the Japanese operations of Morgan Stanley — as much of a “yes, we’re on for it” as you’re likely to get in Japan.
“Assessing what kind of synergies there would be is something to be considered from now. There are many options including the establishment of a joint venture,” Mitsubishi UFJ Securities chief executive Yasumasa Gomi told Reuters. But, he stressed, no agreement has yet been reached.
A combination of Mitsubishi UFJ Securities and Morgan Stanley Japan Securities would surpass Nomura as Japan’s largest securities company in terms of M&A advisory business and yen bond underwriting.
Undoubtedly, Nomura’s recent deal to acquire Lehman Brothers’ Asian operations as well as its European and Middle Eastern businesses gives MUFG some incentive for its recent bout of deal-making.
Related links:
How to say no - er, yes - in Japanese
