Yomiuri Shimbun Staff Writer

Mitsubishi UFJ Financial Group Inc. $(MUFG)$ plans to strengthen its wealth management services as a pillar of its Asian strategy, Deputy Chairman Yasushi Itagaki revealed in a recent interview with The Yomiuri Shimbun. Itagaki oversees the company's Asia strategy.

The following is excerpted from the interview.

The Yomiuri Shimbun: In recent years, you have been stepping up investments in digital companies in Asia. What is the rationale behind this?

Yasushi Itagaki: In countries belonging to the Association of Southeast Asian Nations (ASEAN), the COVID-19 pandemic accelerated the digitalization of finance. We've seen a noticeable trend of digital companies capturing customer segments that banks had previously been unable to reach. Driven by a sense of urgency that banks alone cannot capture this growing market, we have moved forward with investments in digital companies engaged in payments, lending and other services. We aim to build an Asian financial ecosystem that leverages the strengths of both banks and digital companies.

Yomiuri: What areas do you aim to strengthen as part of your Asia strategy?

Itagaki: The wealth management sector. As Asia's economy grows, the number of wealthy individuals is increasing rapidly, and expanding services for this segment is a key challenge. Our joint card business with JCB Co., a major card issuer, targeting such individuals is the first step in this direction. We aim to combine services unique to Japan to provide added value.

Expanding into India

Yomiuri: Why did you choose to invest in Shriram Finance Ltd. (a major non-banking financial company) in India?

Itagaki: Amid rising global geopolitical risks and shifting economic structures, the importance of India -- with its massive domestic demand -- is growing. It was not only India's population and economic growth rate but also its potential to grow solely within its own market that was the deciding factor in our decision to enter the Indian market.

Shriram possesses overwhelming strengths in specific sectors, such as used car financing and lending to regional and rural areas; the firm has built a customer base that no other company can match. Another reason was that, since it is not affiliated with a conglomerate, there is significant room for MUFG to provide capital and expertise.

Yomiuri: What are the synergies with Shriram?

Itagaki: First, we will provide growth capital through a capital increase to support the expansion of lending. MUFG's investment will also enhance Shriram's creditworthiness and lower its funding costs. Leveraging the experience we've gained in ASEAN countries, we will develop India as one of the pillars of our overseas strategy.

We can also expect to create new business opportunities by combining MUFG's customer base with Shriram's regional network. For example, we envision Japanese manufacturers of automobiles and agricultural machinery leveraging Shriram's strong sales network in regional and rural areas to expand their sales in rural parts of India.

Yomiuri: How do you assess the current state of your Asia strategy?

Itagaki: We've reached about the halfway point, but we're still only halfway there. We've established a foothold in ASEAN countries and India, and the framework for our Asian operations is largely in place. Rather than expanding into new countries, the key will be whether each bank and investee can enhance its competitiveness and achieve sustainable growth.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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