March 3 (Reuters) - (The following statement was released by the rating agency)
The Mitsubishi UFJ Financial Group (MUFG) recently announced that all of its Americas banking activities will be consolidated under UnionBanCal Corporation, which will be re-named to the MUFG Americas Holdings Corporation on July 1, 2014. The consolidation has been a long term project for Union Bank and its parent companies. According to Fitch Ratings, the consolidation of U.S. banking activities under a single holding company makes the company well-positioned to comply with the Federal Reserve’s foreign banking rules ahead of schedule. That said, full compliance with the Federal Reserve’s new regulation will require MUFG to move its U.S. Broker Dealer under the MUFG Americas Holdings Corporation umbrella.
In addition to creating an intermediate holding company, BTMU has integrated operations of its U.S. branch banking operations with Union Bank N.A. Although the operations have been integrated, the branch and the U.S. bank remain separate entities.
While there is no expected rating impact from the announcement, Fitch views the organizational changes for the U.S. companies favorably. Early adoption of the Federal Reserve’s rules helps mitigate regulatory risks. Further, Fitch views this operational consolidation of the U.S. branch and the bank as beneficial over the longer term to earnings, which currently lag its regional bank peers.