Japan's Mitsubishi Raises U.S. Ante With Morgan Stake

An overseas banking giant is getting a chance to double down on the U.S. market, courtesy of the turmoil on Wall Street.

Japan's Mitsubishi UFJ Financial Group, one of the largest commercial banks in the world, is investing $8.2 billion to acquire up to a 20 percent stake in troubled investment bank Morgan Stanley. That investment comes shortly after Mitsubishi's recently announced purchase of an ownership stake in Union Bank of California's parent company for $3.5 billion.

Both deals are pending various regulatory and other approvals. However, if they go through, they will give Mitsubishi a very competitive entry into the U.S. financial services market, especially along the West Coast where San Francisco-based Union Bank is headquartered and competes with Bank of America and Wells Fargo.
Union Bank has nearly $60 billion in assets and offices throughout California, Oregan and Washington.

Adding even more firepower: Morgan is coverting to a bank holding company and, with Mitsubishi's backing, intends to aggressively build up its commercial and retail banking base throughout the entire country. Already, Morgan has $36 billion in retail accounts.

It's no secret Mitsubishi is anxious to expand its U.S. presence. For years, the bank has been mired in Japan's slow-growing, at times stagnant, economy, and apparently believes that even a wounded U.S. economy offers greater growth potential.

Initially, Union was viewed as the prime vehicle for U.S. expansion but now it may just be part of a larger presence. With its stake in Morgan, Mitsubishi can expand into investment banking, insurance, commercial and retail banking products.

Mitsubishi isn't the only mega-bank eyeing the U.S. Some of Japan's other banking giants are acquiring or interested in buying U.S.-based insurers, banks and other financial services companies.