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A man walks past a signboard of Mitsubishi UFJ Financial Group's bank at its branch in Tokyo November 18, 2009.(Xinhua/Reuters Photo)
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TOKYO, Nov. 18 (Xinhua) -- Japan's top bank Mitsubishi UFJ Financial Group (MUFG) announced Wednesday its first-half net profit for April-September period surged 53.2 percent from a year earlier to 140.95 billion yen (1.6 billion U.S. dollars).
MUFG, who posted losses of 256.9 million yen (2.89 billion U.S. dollars) in net losses in fiscal 2008, cited its gains made in the past six months were due to the mega bank’s positive returns on investments made in stocks and bonds as well as increased capital gains made through its corporate lending infrastructure, which is Japan's largest.
According to a statement made by the bank Wednesday, it's original forecast of net profits amounting to 300 billion yen for the year through March, has remained unchanged.
MUFG further announced Wednesday that it will join forces with global financial services firm Morgan Stanley and create two new companies through the integration of the two firms' brokerage and securities divisions, consolidating their operations in Japan. In a joint statement made by the two companies the U.S. firm will be allowed to maintain a voting majority at its Japanese brokerage.
Under their initial plan, MUFG and Morgan Stanley agreed to merge the whole units, with Morgan Stanley originally agreeing to integrate Mitsubishi UFJ Securities Co. and Morgan Stanley Japan Securities Co., with MUFG to take a 60 percent stake in the merged entity, and its U.S. counterpart a 40 percent controlling interest. However the revised plans, which now make allowances for the U.S. firm to continue to utilize its global network for stock dealings, sees a joint venture between the two financial giants.
Statements made by representatives from both parties on Wednesday said the merger will now comprise a two-company structure and according to a MUFG spokesperson the merger between its brokerage unit and Morgan Stanley, will be delayed until May, two months later than originally planned.
Current plans are for one of the companies to be called Mitsubishi UFJ Morgan Stanley Securities Co. and will be 60 percent owned by MUFG and 40 percent owned by Morgan Stanley. Morgan Stanley's investment banking business will fall under the umbrella of this company, as will MUFG's wholesale and retail operations.
The second company in the joint venture will see Morgan Stanley having a 51 percent controlling stake and will operate under the designation Morgan Stanley MUFG Securities Co. This side of the company will be responsible for the equity and bond trading businesses of Morgan Stanley.
Morgan Stanley Chief Executive Officer John Mack turned to Mitsubishi UFJ in September 2008 and the Japanese bank bought about 20 percent of Morgan Stanley for 9 billion U.S. dollars, at the height of the global financial crisis, in a move that bolstered the U.S. bank's shaken finances while allowing MUFG to broaden its global reach. But Morgan Stanley's fortunes have improved dramatically since then.
Morgan Stanley reported two consecutive quarters of profit and repaid 10 billion U.S. dollars to the U.S. government, as equity and bond markets recovered from last year's financial hammering. Morgan Stanley's stock has more than doubled this year while shares in MUFG have slumped 12 percent.
Following recent fundraising initiatives by a host of Japanese corporations, MUFG also said Wednesday that it has filed a shelf registration with the Kanto Local Finance Bureau to issue up to 1 trillion yen (U.S. 11.2 billion dollars) in common shares, at some point between Nov. 26 of this year and Nov. 25, 2010, in an attempt to boost its capital base.
The new share issuance would be the biggest-ever share sale by a Japanese financial institution and based on MUFG's prevailing market capitalization of 5.638 trillion yen (63.14 billion U.S. dollars), the new amount could comprise 18 percent of its outstanding shares.
Special Report: Global Financial Crisis
