Japan's best domestic bank 2019: MUFG
The last 12 months could have been a tricky time for MUFG, with the transition from Nobuyuki Hirano to Kanetsugu Mike in the chief executive and president roles at the group level. But when one meets the two men, one is struck by the similarity: internationally minded and influenced, fluent in English, big thinkers, willing to shake things up.
It’s just as well, as Japanese banking needs plenty of thinking and shaking up. Mike is continuing a six-year restructuring programme (they call it ‘reimagining’, but each to their own) whose imperatives include cost reduction, a slimming of risk-weighted assets, tech innovation, Asean expansion and a total reinvention of the wealth management business.
The last of these will be the clincher. The great headache of wealth management in Japan is that there is a vast amount of individual wealth – Y1,800 trillion (or $16.6 trillion) in household financial assets – but nobody seems to want to spend or invest them.
More than half is dormant in bank accounts, and in a negative-yield environment one has to wonder what is going to coax that money out into productive investment.
One challenge is that it is mainly held by the elderly, who don’t wish to take risks and who remember the bubble bursting; another is that there is no tradition at all for paying for advice.
Every bank in Japan has the same idea of changing its approach, message, channels and structure around wealth, but MUFG does have the considerable advantage of drawing on Morgan Stanley’s US expertise. Branches are being changed to become places for advice rather than processes; digital methods of reaching investors are being revamped.
It is a big ask but a necessary attempt to solve the considerable problem of banking a country with a shrinking population, ageing society and a climate of negative yields.
The other standout is international expansion, in which MUFG clearly leads the megabanks. It continues to wrestle with getting the best from its US franchise, but in Asean it stands out, with the Bank of Ayudhya deal a role model for any foreign bank wanting to make the best of an acquisition in Asia, allowing the bank to continue to do what it is good at while supporting it with money, clients and tech.
MUFG is now exposed to high-growth markets that will help it make the painful changes, both practical and cultural, that need to happen at home.