US bank buys MUFG Union Bank for $ 8 billion


Ken Wolter /

Early Tuesday morning, Minneapolis-based US Bancorp announced it had an agreement to buy MUFG Union Bank for around $ 8 billion. The deal primarily strengthens US Bank’s footprint in California.

Union Bank is owned by Tokyo-based Mitsubishi UFJ Financial Group Inc., which describes itself as “one of the world’s leading financial groups”. Union Bank is based in San Francisco.

The deal calls for US Bank to acquire Union Bank for $ 5.5 billion in cash and about $ 2.5 billion in shares. Once the deal is concluded, MUFG will own a 2.9% stake in US Bank. The deal is not expected to be finalized until the first half of 2022.

Union Bank reported sales of $ 2.9 billion for the 12 months ending March 31, 2021. Union Bank has 280 branches in California and additional locations in Oregon and Washington State.

The deal brings US Bank 1 million consumer accounts and 190,000 merchant bank customers.

An electronic presentation that the US bank prepared for a conference call to discuss the transaction noted that the deal brings a “stronger footprint in attractive growth markets.” US Bank specifically highlighted Los Angeles, San Diego and the San Francisco Bay Area.

“The acquisition of MUFG Union Bank underscores our commitment to strengthen and grow our West Coast business, invest to serve customers and local communities, and strengthen competition in the financial services industry… We are also committed to to maintain the excellent results of both organizations in serving low-income communities and supporting minority-led institutions, ”US Bancorp President, President and CEO Andy Cecere said in a statement.

Mergers and takeovers typically lead owners to remove duplicate functions to reduce expenses. According to the US Bank statement: “US Bancorp expects to achieve approximately $ 900 million in pre-tax cost synergies equivalent to 40% of estimated non-interest expense through a combination of real estate consolidation, technology and conversion. systems and other back office efficiencies. “

But US Bank also offered this assurance to Union Bank employees: “After the transaction closes, US Bank has committed to retain all frontline employees at the MUFG Union Bank branch. “

A file from Mitsubishi UFJ Financial Group explained why the company wanted to sell its regional banking operations:

“MUFG considers the American regional banking activity to be an important activity for the group’s strategy. At the same time, given the current business environment for MUB, including the need for increased technology investments as part of the digital transformation, a certain scale is needed to maintain and strengthen competitiveness. In these circumstances, MUFG concluded that the transfer of MUB to [U.S. Bank] , a large US bank with a solid business base is the most appropriate decision that will lead to providing better financial services to customers and communities and unlocking the potential value of MUB’s franchise.

The deal does not include MUFG Union Bank’s Global Corporate & Investment Bank and other assets.

The US Bank purchase is the latest in a long line of bank mergers and acquisitions this year. In June, for example, Huntington Bank completed its $ 6 billion acquisition of TCF Financial Corp. MarketWatch, this year’s bank mergers are “at their highest level since the global financial crisis” in 2007.

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