TOKYO: The Bank of Tokyo-Mitsubishi UFJ, Japan’s largest financial group, has unveiled plans to extend its advance across Asia by acquiring a 20 per cent stake in Security Bank of the Philippines.
The decision to pay nearly $800m for a foothold in the midsized commercial lender, follows a record year of Y10tn outbound mergers and acquisitions activity by Japanese companies in 2015.
BTMU would continue to look for other opportunities to expand in Asia, people close to the bank said, and brokers have speculated that the bank may be looking specifically at Indonesia and Myanmar. Through deals struck respectively in 2012 and 2013, the lender already has sizeable stakes in banks in Vietnam (VietinBank, 20 per cent stake) and Thailand (Ayudhya, 76 per cent stake).
The stake in Security Bank will cost BTMU $774m and, according to Security Bank, represents the biggest equity investment by a foreigner in the Philippines’ financial sector.
The price agreed by BTMU means it is paying an 81 per cent premium over the closing price of Security Bank’s shares on Wednesday — a level that analysts said corresponds with corporate Japan’s reputation for paying fully to win its overseas prizes.
Japanese companies themselves have justified their decisions by citing the need to pursue growth outside Japan — an economy whose long-term growth prospects are limited by the shrinking population and, in the case of the financial services sector, by the ageing of its customer base.
BTMU and Security Bank said at separate press conferences that they had agreed to form a “strategic partnership”. Alfonso L Salcedo Jr, Security Bank’s chief executive, said: “It will allow us to accelerate the expansion of our branch network to support retail market penetration as well as make inroads into the Japanese business sector”.
The deal comes as Japan’s “big three” financial houses are positioning themselves for growing trade links between Japanese and Asian companies.
BTMU’s chief executive for Asia and Oceania told a press conference in Manila that he would seriously consider expanding the stake in Security Bank if the situation arose. “We are making headway in our effort of becoming a Tier 1 global financial institution in the Asia market by 2020,” he said.
Japan’s focus on Asia’s financial services industry, say analysts, has intensified since last year when countries in the region agreed in principle to the Trans-Pacific Partnership — a multinational deal that will lower tariffs and is expected to increase trading activity by Japanese companies. BTMU’s rivals, Sumitomo Mitsui Financial Group and Mizuho Bank have, within the past five years, built stakes in banks in Vietnam and Hong Kong.
