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Swot Analysis of Mitsubishi Ufj Financial Group

Autor:   •  November 10, 2017  •  1,552 Words (7 Pages)  •  750 Views

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it is retail banking and it’s corporate investment banking.

3.3.2 Expansion of its’ financial network

Recent year, MUFG has seek to drive their business expansion in Asia, where high growth potential is expected, as well as in America and Europe through capital and business alliances with leading financial institutions worldwide and also strengthening overseas Corporate and Investment Banking (CIB) operations. Through these strategies, MUFG able to raise the share of net operating profits derived from international operations over the medium and long terms. In September 2009, MUFG started a strategic alliance with Morgan Stanley, a global financial services firm and a market leader in investment banking, in order to achieve steady results in overseas operations yet become a leading company in the Japanese securities industry. These strategic alliances offered a powerful opportunity to MUFG for actively expand its’ operations through collaboration that leverages the two partners’ strengths in various regions.

3.3.3 Global Asset management industry

MUFG have positioned Retail, Corporate and Trust Assets as their three core businesses. MUFG focus on offering products that meet customers’ diverse needs in the Retail Business. Whereby, the Corporate Business is to drive forward with their Corporate and Investment Banking (CIB) strategy through global collaboration with Morgan Stanley and to quickly achieve the synergies of the integration of our securities companies in Japan. The growth efforts of MUFG’s Trust Assets Business are aimed on expanding assets under management and strengthening intra-Group cooperation and product development. The coordination of all the capabilities lets MUFG able to strengthen their profitability meanwhile they able endeavour to increase the Group’s presence as a global asset management institution.

3.3.4 Organizational Restructuring

Recently, in July 2014, Union Bank was renamed MUFG Union Bank and all BTMU’s U.S. employees were integrated into MUFG Union Bank with the aim of further enhancing our competitiveness and presence in the United States. These changes will reinforce the MUFG’s U.S. dollar funding capabilities on a global basis and help to enhance their internal controls structure and resulting an even more solid organization, capable of responding to the trend of heightened regulatory expectations, both locally and internationally.

3.4 Threats

3.4.1 Global financial crises

The major threats of MUFG are the instability in the financial markets, particularly in Europe and the fluctuations in securities markets globally. Significant fluctuations in foreign exchange rates could result in increases in costs, decreases in sales, valuation losses on foreign exchange derivatives and other adverse financial consequences affecting our borrowers’ results of operations, as well as borrowers losing financial resources to settle such derivative transactions and cause problems loans. In September 2014, despite a difficult business environment due to the global financial crisis, MUFG Asia-Pacific equity market has declined for the last 8 months in US dollar terms mainly due to the worst economic condition in China and also the over concern earlier than expected rate hike in US.

3.4.2 Highly competitive environment

MUFG is the world’s largest bank holding company by total assets. However, banking is a highly competitive business. With the increasing competitive pressure due to global consolidation of financial services companies and alliances forming financial institutions particularly in our principal markets such as JPMorgan Chase’s acquisition of Washington Mutual and Wells Fargo Bank’s acquisition of Wachovia Bank resulting from adverse economic and financial market conditions. Such large financial institutions may have greater access to capital at a lower cost than us, which may adversely affect our ability to compete effectively. Moreover, the competitors of MUFG can be a large number of state and national banks, thrift institutions, finance companies, credit unions, mortgage banks and major foreign-affiliated, as well as many financial and nonfinancial firms that offer similar services with MUFG.

3.4.3 US Subprime impact

In a regular filing to the Securities and Exchange Commission, MUFG outlined about 40 potential risks to its earnings, including exposure to the U.S. subprime market. The impact of U.S. subprime for Japanese banks is very limited and manageable, but the market keeps dumping the stocks. MUFG had a balance of ¥280 billion in subprime-backed securities. With the recent credit market instability in the U.S. subprime market resulting from concerns with increased defaults of higher risk mortgages MUFG had suffer an unrealized losses of about ¥5 billion on investments as well as the shares of MUFG fell of 5.3 percent.

3.4.4 Natural calamities in the home country

The home country of MUFG is Japan where was cited as top 10 worst natural disasters in the 21st century. If any external factors happened in Japan such as earthquakes, tsunamis, floods, typhoons and other natural disasters will resulting in direct damage to the business operations of MUFG. For instance, Japan’s Fukushima nuclear power plant crisis has turned to the country’s biggest banks for an emergency loan of up to ¥2,000 billion for clean-up and rebuilding costs. This crisis has a great impact on MUFG up to ¥300

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