* Over half of the portfolio is in top 3 U.S. metropolitan
* MUFG has been actively looking for U.S. acquisition
* Amount to be paid not disclosed; all-cash transaction
By Taiga Uranaka and Denny Thomas
TOKYO/HONG KONG, April 8 Mitsubishi UFJ
Financial Group has acquired a U.S. commercial property
loan portfolio from a Deutsche Bank unit worth $3.7
billion, as cashed-up Japanese lenders swoop in on assets sold
by retreating European banks.
The deal, which comes as MUFG is pushing aggressively to
ramp up its U.S presence, will make the Japanese bank the ninth
biggest commercial real estate lender in the United States, up
from 17th, while diversifying its property portfolio and
allowing it to deploy excess capital.
It also comes as a number of European banks offload loan
portfolios and exit non-core operations, helping them to raise
capital to meet tough new regulatory norms under Basel III
The all-cash acquisition is expected to close in the second
quarter of this year and does not require any regulatory
approval, MUFG said in a presentation. It did not disclose the
amount to be paid in the transaction.
The bank also noted that U.S. commercial property prices
have recently recovered from 2009 lows.
About 52 percent of loans are made to properties in the top
three U.S. metropolitans areas: New York City, Los Angeles and
MUFG President Nobuyuki Hirano has said the bank wants to
double the size of its unit Union Bank, which would make it the
10th largest lender the United States. The San Francisco-based
bank bought Pacific Capital Bancorp for about $1.5 billion last
Relatively unscathed by Europe's debt problems and boasting
stronger capital and liquidity positions than their global
peers, MUFG and domestic rivals Mizuho Financial Group
and Sumitomo Mitsui Financial Group have been actively
scouting for distressed assets as they confront slowing loan
demand at home.
Overseas purchases have pushed up the foreign share of total
outstanding loans for the three megabanks to 20 percent at
end-September 2012, compared with 16 percent at the end of March
2010, according to Moody's Investors Service.
In 2010, MUFG acquired a $6.4 billion project financing loan
book from Royal Bank of Scotland. More recently, Mizuho
agreed to buy a Brazilian unit of Germany's WestLB for about
But Moody's Investors Service senior analyst Tetsuya
Yamamoto said he expected the pace of overseas purchases by
Japan's top three banks to slow as their foreign currency
funding is not that strong compared with their Japanese yen
While they have been looking at buying minority equity
stakes in some Asian banks, that would be a drain on core
"From a regulatory capital perspective, acquisition of loans
would make more sense than a minority stake in a foreign bank,"