(Sale of MUFG Union Bank, N.A. and Transfer of Certain Businesses of MUFG Union Bank, N.A.)
On December 1, 2022, MUAH, a subsidiary of MUFG whose financial statements as of the end of and for the nine-month period ended
September 30, 2022 have been consolidated with MUFGs financial statements, completed the sale of all of the shares in MUB held by MUAH to USB (hereinafter referred to as the Share Transfer).
The MUB businesses that were transferred to USB through the Share Transfer excluded the GCIB (Global Corporate & Investment Banking)
business (with certain exceptions as agreed to by the parties, including certain deposits of the GCIB business that are retained by MUB), the Global Markets business to the extent related to the GCIB business, which consisted of transactions with
clients and investors, and certain assets and liabilities, etc. that were part of shared middle and back office functions, etc. Such businesses, and the customer assets and liabilities, etc. related to these businesses (including related
transactions with such customers) were transferred to the Bank and MUAH prior to the Share Transfer for consideration paid in the form of cash.
(1) |
Outline of the business divestiture |
|
(a) |
Name of the acquiring entity |
U.S. Bancorp
|
(b) |
Description of the divested businesses |
Retail and Commercial Banking businesses of MUB
|
(c) |
Main objectives of the business divestiture |
MUFG has viewed the U.S. regional banking business as an important business for the groups strategy. At the same time, given MUBs
current business environment, including the need for increased technology investments as part of digital transformation, a certain scale is required to maintain and strengthen MUBs competitiveness.
Under these circumstances, MUFG concluded that transferring MUB to USB, a major U.S. bank with a strong business foundation, would be the most
appropriate decision that was expected to lead to providing higher quality financial services to customers and communities and unlock MUBs potential franchise value. From the perspective of MUFGs optimization of management resources
under the current medium-term business plan, MUFG determined that the sale of MUB and the shift of focus to corporate transactions in the United States would help maximize shareholder value through an increase in capital efficiency.
|
(d) |
Date of the business divestiture |
December 1, 2022
|
(e) |
Legal form of the business divestiture |
Transfer of shares for consideration paid in the form of cash and shares
(2) |
Overview of the accounting treatment expected to be reflected in the consolidated financial statements as of
the end of and for the fourth quarter of the fiscal year ending March 31, 2023 |
While all amounts are currently
under determination, current estimates are as follows.
|
(a) |
Amount of gains or losses on the Share Transfer |
Gains on sales of shares of subsidiaries: Approximately ¥700 billion
|
(b) |
Amounts of assets and liabilities related to the divested businesses |
Assets: Approximately ¥13,640 billion (including loans of approximately ¥7,570 billion and securities of approximately
¥3,120 billion)
Liabilities: Approximately ¥12,980 billion (including deposits of approximately ¥11,800 billion)
The difference between the sale price and the consolidated book value of the transferred shares will be recorded in extraordinary gains as
gains on sales of shares of subsidiaries.
(3) |
Name of the reporting segment in which the divested businesses were mainly included |
Global Commercial Banking Business Group
(4) |
Approximate amount of income or loss related to the divested businesses recorded in the consolidated statement
of income for the nine-month period ended December 31, 2022 |
Total income: ¥360,721 million
Loss before income taxes: ¥968,110 million
(5) |
Overview of continued involvement related to the business divestiture |
MUFG received shares of USB as part of the consideration for the Share Transfer.
In addition, the Bank and USB have entered into a Transitional Service Agreement and a Reverse Transitional Service Agreement with an aim for
both the Bank and MUB to be able to smoothly continue to provide high quality financial services even after the Share Transfer. The Bank provides and receives certain services based on such agreements.
In addition, the corporate credit card business for GCIB business customers and certain Japanese customers is expected to be transferred from
MUB to the Bank, subject to certain conditions precedent, including the receipt of regulatory approval.
II. |
Transaction under common control |
(1) |
Overview and objectives of the business transfer |
The GCIB business (with certain exceptions as agreed to by the parties, including certain deposits of the GCIB business that are retained by
MUB), the Global Markets business to the extent related to the GCIB business, which consisted of transactions with clients and investors, and certain assets and liabilities, etc. that were part of shared middle and back office functions, etc., were
transferred to the Bank and MUAH prior to the Share Transfer by the end of November 2022.
The MUFG group continues to view the U.S. market
as a strategically important market after the Share Transfer and, through this transaction, aims to optimize management resources with a strategic focus on corporate transactions where the MUFG group believes it can leverage its strengths.
(2) |
Overview of the accounting treatment applied |
The transaction is treated as a transaction under common control under ASBJ Statement No. 21, Accounting Standard for Business
Combinations (ASBJ, January 16, 2019), and ASBJ Guidance No. 10, Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ, January 16, 2019).
(3) |
Amounts of assets and liabilities transferred to the Bank in connection with the business transfer
|
Assets: ¥3,298,438 million (including loans of ¥2,729,179 million)
Liabilities: ¥503,791 million (including acceptances and guarantees of ¥337,944 million)
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