Selling MUFG Union Bank: retreat from West-Coast retail (2021)

Bought, sold, and still holding equity

The heart of this decision is the retreat from the retail bank it had built over 38 years on the US West Coast, narrowing the place where it earns to corporate and investment banking. The Americas retail business — begun in 1984 when Mitsubishi Bank bought the Bank of California — was a heavy operation carrying branches and deposits, and as IT spending on digitization became a condition of competing, the burden of holding scale on its own grew. The proceeds of the sale, and the capital it freed, were reshuffled toward the alliance with Morgan Stanley. Buy and grow, and let go when the conditions change — it was a portfolio swap by a megabank that had made long-term holding its rule.

That said, MUFG did not cut its ties to Americas retail. Through the roughly 3% stake in U.S. Bancorp taken as part of the consideration, it receives, as a shareholder, a share of the earnings the bank it sold generates, and it kept points of contact — Japanese customers and the payments field — through a business alliance. Not to sell out and leave, but to step down from direct management and stay thinly involved through equity and partnership — this form, which lightens risk and capital while keeping part of the fruit in hand, offers one answer to how to wind down an overseas business. Should the conditions of US interest rates or scale change, the way MUFG relates to the Americas will be redrawn again.