Japan’s MUFG Battles Private Equity, Startups to Hire US Bankers

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(Bloomberg) — Hiring for bankers in the US is getting harder for Japan’s largest lender, according to a top executive who sees more competition to recruit top talent from a wider slate of companies.

It’s a challenge Mitsubishi UFJ Financial Group Inc. must overcome as it focuses on growing its corporate banking presence in the US, the world’s largest market. That’s an area of strength for the Japanese bank, and one where it wants to add headcount, said Fumitaka Nakahama, the firm’s head of global corporate and investment banking.

“Bankers are not necessarily quitting to join other investment banks,” Tokyo-based Nakahama said in an interview. “They are also joining startups and PE funds. Destinations are changing.”

MUFG and its two main rivals — Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. — are plowing more resources into the American market in a bid to grow alongside established powerhouses like Goldman Sachs Group Inc. and JPMorgan Chase & Co. Banks in Japan have for years sought higher returns outside their home market as ultra-low interest rates weighed on the outlook.

Earlier this year, MUFG hired more than 20 people from Silicon Valley Bank to boost its technology, media, and telecom banking group. Nakahama said healthcare and restaurant chains are also among the sectors being beefed up.

“We are trying to build a full range of wholesale banking, from those early-stage growth companies to large ones,” he said.

MUFG has been undertaking a makeover in its US operations after it sold its Union Bank unit to U.S. Bancorp last year.

“This is something we could not do when we had Union Bank, which ran its small- and medium-sized business operations independently and they were mainly in the West Coast areas,” he said.

MUFG is ranked ninth this year for US loans, behind most of the major US lenders, though ahead of its Japanese competitors, according to data compiled by Bloomberg.

Rivals’ strategies have started to diverge recently. In addition to its debt business, Mizuho Financial is doing more work in M&A advisory and equity capital markets, having bought Greenhill & Co. earlier this year. Its US team won a lead underwriting role for Arm Holdings Ltd.’s initial public offering. Sumitomo Mitsui’s US arm recently hired fixed-income directors, after the group said earlier this year it would hike its stake in Jefferies Financial Group Inc.

Sharing Fees

Nakahama said MUFG has a division of labor with its partner Morgan Stanley, in which the Japanese bank has about a 20% stake. “It’s very costly to have ECM people,” he said, adding his bank does not intend to do M&A advisory for large deals, either. “These areas are done by Morgan Stanley.”

Instead, MUFG caters to companies that are too small for its partner, including startups. “When these companies do an IPO, we will refer them to Morgan Stanley and we share fees,” he said.

Nakahama said project finance continued to drive the bank’s US businesses this year, thanks to a boom in infrastructure deals. MUFG plays a lead arranger role, structuring finance and selling loans to investors including US regional banks, he said.

“The impact of IRA is big,” he said, referring to the Inflation Reduction Act in the US, which offers subsidies for low-emissions fuels and climate technologies. “There are various new energy projects and renovation of infrastructure.”

Blended Finance

In Asia, Nakahama said the bank sees opportunities in energy transition finance. His firm is examining options in blended finance — where the private sector helps to attract investment into sustainable projects — and could announce details on this by the end of this year. He declined to elaborate further as discussions are ongoing.

He said the funds are likely to attract global investors as they will be designed to appeal to different levels of risk appetite.

“It’s our role to create various structures to attract private-sector money,” he said.

Image by: MUFG

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Edmund Shing, PhD

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Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

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