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Monday, September 25, 2023

MUFG revamps JV with Morgan Stanley in Japan

Mitsubishi UFJ Financial Group Inc and Morgan Stanley are set to merge certain operations within their Japan-based joint ventures, marking the first significant reorganization since their establishment over a decade ago.

In this restructuring, the companies will combine Japan equity sales for institutional clients, corporate access, research, and a portion of execution services, as per their joint statement. Additionally, they will collaborate on foreign-exchange trading.

The partnership between the two firms was forged during the financial crisis in 2008 when Japan’s largest lender invested $9 billion in the Wall Street bank, obtaining a 20% stake. This led to the creation of two securities joint ventures in Japan in 2010, with Morgan

Stanley MUFG Securities Co being 51% owned by the US bank, and Mitsubishi UFJ Morgan Stanley Securities Co being 60% held by the Japanese lender. As part of the current restructuring, the business functions being consolidated will be transferred to the Morgan Stanley-led entity.

Both Morgan Stanley CEO James Gorman and MUFG CEO Hironori Kamezawa expressed their commitment to enhancing the strategic alliance between the firms for the future.

The overhaul is not expected to result in job cuts, according to Yuki Hasegawa, a managing director at Morgan Stanley MUFG Securities, and approximately 100 staff from the MUFG-led entity will be transferred to the Morgan Stanley-led venture.

The changes are planned to take effect in the first half of 2024, pending regulatory approval. The decision to maintain the two joint ventures is based on their ability to best serve clients, as stated by Iichiro Takahashi, a planning manager at MUFG.

Regarding foreign exchange, MUFG’s main banking unit will utilize the trading platform of the Morgan Stanley-led venture, while sales operations will remain independent at each firm.

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