(More Bank) – Mitsubishi Financial Group UFJ Inc. has agreed to buy out DZ Bank's aviation financing division in one of its largest acquisitions since its inception in 2005.
The assets that MUFG has purchased from the second largest German bank, held by its subsidiary DVB Bank, include a loan portfolio of 5.6 billion euros ($ 6.4 billion), as well as employees of the company. 39; unit and 'part of the operating infrastructure', according to press releases of the two banks on Friday. The companies confirmed an earlier report on the More Bank sale.
The agreement is the latest for Japan's largest bank among a series of acquisitions abroad, as it aims to offset declining returns in a country with extremely low interest rates and slow economic growth.
Recent MUFG transactions include the purchase of an additional interest in PT Bank Danamon Indonesia and an agreement to acquire the asset management unit of the Commonwealth Bank of Australia. At the same time, MUFG sold stakes in companies such as Standard Life Aberdeen Plc and Brazil's Banco Bradesco SA to improve the efficiency of its investments and free up capital.
"This is a step in the right direction," said Toyoki Sameshima, Senior Banking Analyst at SBI Securities in Tokyo. "MUFG has moved its assets to more profitable areas. My general impression is positive. "
MUFG has developed its aviation financing activities in recent years and, in 2016, engaged Olivier Trauchessec, a veteran of the sector, to conduct a prospecting campaign on the American continent. Other Japanese financial companies such as Orix Corp. and Sumitomo Mitsui Financial Group Inc. have made acquisitions in the field of aircraft leasing.
"Aviation financing is a key pillar of MUFG's growth and this acquisition will dramatically alter our ability to deliver tailored solutions to our customers," said Masato Miyachi, senior executive of the company. . "We are excited to welcome many experienced professionals into our team, which allows us to expand our client base and strengthen our leading position in this space."
MUFG shares closed 0.3% higher on Friday afternoon in Tokyo after slipping 0.4% earlier.
The sale of the aviation portfolio is the next step for DZ Bank in its efforts to reduce or sell DVB. It has recently signed an agreement with another German lender, Helaba, for the sale of its rail loan portfolio. Deutsche Bank AG was also interested in buying the aviation assets, said people familiar.
DVB Bank recorded a loss of 774 million euros in 2017, deepening a hole in the parent company's annual accounts, as DZ Bank was forced to reinforce its loan loss provisions. DZ Bank will release its 2018 results on March 5th.
Japanese companies announced overseas acquisitions of $ 18.4 billion this year, after the volume of such deals more than doubled in 2018 to a record $ 190.4 billion, according to reports. data compiled by More Bank. The largest acquisition of Shire Plc by Takeda Pharmaceutical Co. was $ 62 billion last year.
MUFG, based in Tokyo, discussed the purchase of DVB more than four years ago, before the end of negotiations because of disagreements over the structure of the deal, reported More Bank at the time. The Japanese megabank was created when its predecessor bought UFJ Holdings Inc. in 2005 as part of a transaction valued at 3.1 billion yen.
The transaction with DZ Bank is expected to close in the second half of 2019. The purchasing entities are MUFG Bank Ltd. – the main banking unit of the Japanese lender – and its subsidiary BOT Lease Co.
–With the help of Stephan Kahl.
To contact the reporters on this story: Steven Arons in Frankfurt at sarons@More Bank.net Yuki Hagiwara in Tokyo at yhagiwara1@More Bank.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@More Bank.net, Russell Ward, Marcus Wright
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