MUFG says mulling Asia retail banking

By David Dolan and Taro Fuse

TOKYO (Reuters) - Mitsubishi UFJ Financial Group (8306.T), Japan's largest bank, is considering starting a retail banking business in Asia in the next three years to tap the region's growth, a senior executive said on Wednesday.

Tatsuo Tanaka, deputy president of Bank of Tokyo Mitsubishi UFJ, the group's core banking unit, also told the Reuters Japan Investment Summit that it is looking to expand its U.S. commercial banking business.

"From here on in Asia, and especially in China, consumer spending and domestic demand will expand a great deal. In that sense, the retail market is growing rapidly," Tanaka said.

"I think we would do something in the next three years. In the current environment it is difficult to decide where and how you would like to invest."

The bank already has a commercial banking presence across the region. However, outside of Japan its retail banking business is largely limited to the United States, where it owns a regional lender.

Mitsubishi UFJ is the largest shareholder in Morgan Stanley (MS.N), after paying $9 billion for a 21 percent stake last year. The two banks last week announced details of a strategic alliance focused on corporate lending.

They will form a joint venture to offer loans to North American firms, with more than $100 billion in combined loan commitments, they have said.

Mitsubishi UFJ has said the alliance was expected to contribute 30 billion yen in gross profit for the year to March 2012.

Tanaka said the bank could also use its U.S. unit, California-based Union Bank N.A., to increase its lending in the world's largest economy.

"It is possible that we can use Union Bank as a base to build out our commercial banking business in America," he said.

Mitsubishi UFJ last year paid $3.5 billion to make UnionBanCal Corp, the California bank's holding company, a wholly owned subsidiary.

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(Reporting by David Dolan and Taro Fuse; Editing by Hugh Lawson)