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Mitsubishi UFJ (MTU) to Acquire a 40% Stake in Bank Danamon


Mitsubishi UFJ Financial Group, Inc.’s MTU core banking unit, The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”), might acquire a 40% stake in Bank Danamon Indonesia, Reuters reported. The 200 billion yen ($1.75 billion) buyout is an attempt by the Japanese banking behemoth to expand its footprint in Southeast Asia.

Per the source, Mitsubishi UFJ’s intention is to buy shares from Singapore state investor, Temasek Holdings, a major shareholder in Bank Danamon. Notably, Danamon lends to the retail and corporate sectors, and inculcates microfinance.

MUFG plans to sign an agreement this year and acquire the stake in its next financial year, commencing April 2018. Moreover, the Japanese bank plans to buy a majority stake in the future with the Indonesian government’s approval.

“The company is strategically considering various investment opportunities in Indonesia,” an MUFG representative said. According to the representative, information provided by the domestic media reports related to plans for a Danamon stake are not supported by any announcement made by the company.

The weakness in the Japanese loan market, along with compressed margins, has triggered Mitsubishi UFJ’s interest in other Asian markets. In recent years, MUFG has strengthened its foothold in Southeast Asia, holding stakes in Vietnam's Vientinbank, Thailand's Bank of Ayudhya and Security Bank Corp of the Philippines.

Currently, Mitsubishi UFJ holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company gained 3.9% over the past six months compared with the 6.8% growth recorded by the industry.

Stocks to Consider

Lloyds Banking Group PLC LYG has been witnessing upward estimate revisions for the last two months. Additionally, the stock has jumped more than 15% year to date. It currently carries a Zacks Rank of 2 (Buy).

KB Financial Group Inc KB has been witnessing upward estimate revisions for the past one month. Also, the company’s shares have risen nearly 43.5% in a year’s time. It flaunts a Zacks Rank of 1, at present.

Banco Santander Brasil SA BSBR has been witnessing upward estimate revisions for the past 60 days. In six months’ time, the company’s share price has been up more than 5%. It also carries a Zacks Rank of 2.

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