By Kentaro Otsuka and Shinichi Ikeda

Yomiuri Shimbun Staff Writers

Kanetsugu Mike, chairman of Mitsubishi UFJ Financial Group Inc. $(MUFG)$, said the success of the merger between Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. 20 years ago stemmed from "putting the right people in the right jobs."

Oct. 1 marked the 20th anniversary of the merger, which resulted in the establishment of MUFG. "Personnel appointments may cause friction between employees who were at different banks before the merger," said the 68-year-old Mike. "However, it's important for employees from one bank to think about how to utilize the strengths of the others."

Mike was in charge of integrating the banks' systems during the merger. When he was the president of the Bank of Tokyo-Mitsubishi UFJ Ltd. (now MUFG Bank Ltd.), he worked on measures such as reducing the number of its branches.

The following is excerpted from the interview.

The Yomiuri Shimbun: You were in charge of integrating systems during the 2005 merger, which was the first hurdle the merger faced. How did you handle it?

Kanetsugu Mike: At that time, a total of 730 deposits and transfers were made per second (at the Bank of Tokyo-Mitsubishi Ltd. and UFJ Bank Ltd.). If a system failure had occurred for 10 minutes, it would have halted 400,000 transactions. The situation was totally unacceptable, so we had to take a pragmatic approach. We decided to refrain from developing new functions and implementing other changes until after the integration took place.

Some were of the opinion that we should improve the system, as we were establishing a new bank, but we shelved such discussions. For the core system, we adopted the one used by the Bank of Tokyo-Mitsubishi. We then added products and functions from UFJ Bank, but only when we judged them to be better (than those offered by Tokyo-Mitsubishi.) Adding new services was difficult, but we wanted to avoid a significant drop in the quality of our services.

Yomiuri: Is it true that the system integration resulted in services being cut?

Mike: After discussions, we noticed that there were services that customers weren't using much. (Both banks) had been hesitant to scrap (those services), so we ended up significantly trimming the services related to card loans.

Yomiuri: You became vice chairman of Thai-based Bank of Ayudhya in 2014 after it was acquired by MUFG. It was the biggest acquisition conducted by a Japanese bank in Southeast Asia. Can you reflect on it?

Mike: There was one crucial difference between our case and other acquisitions conducted by U.S. and European banks in Southeast Asia: The name of the purchased bank wasn't changed. That point was included in discussions with the Bank of Ayudhya. The bank's owner also said, "We want to entrust (the bank's management) to MUFG, which has the best track record in Japan." His words also helped us make the decision not to change the name.

We dispatched about 50 employees to the Thai bank from MUFG immediately after the acquisition. I spoke with those employees at that time and told them: "You don't know how to manage the Bank of Ayudhya or about business methods in Thailand. Remember, we go (to Thailand) to learn."

I thought that if we actively sought to learn from the Bank of Ayudhya, it would prompt its members to ask us how we manage things at MUFG. That would be the right timing to share our methods with them. As a result of all this, the integration of the Thai bank was completed within a year. I believe it went well.

Yomiuri: In 2021, your company sold MUFG Union Bank, a U.S. regional bank. What was the background of the sale?

Mike: At that time, Union Bank faced challenges in coping with outdated systems and financial regulations in the United States. One option was to streamline the bank's management on our own, but we received a proposal from U.S. Bancorp (a major regional bank) to purchase Union Bank. We had discussions about the proposal and concluded that local communities and customers would benefit from better services if the bank was sold. We also thought that reallocating the capital (earned through the sales) to other fields would be better for MUFG stakeholders.

Yomiuri: You worked on reducing the number of staff and branches when you were the president of the Bank of Tokyo-Mitsubishi UFJ. Could you speak about the details of those measures?

Mike: We analyzed data on how many customers visit branches in person and found that the figure had halved over the previous five years. Meanwhile, our branches are opened for counter services from 9 a.m. to 3 p.m., Monday through Friday. This means that the branches are opened for 30 hours a week, which accounts for only 18% of the total 168 hours in a week. Under the negative interest rate policy (introduced by the Bank of Japan in 2016), it became difficult to cover (the branches') expenses with business from deposits and loans, which made me decide to cut 20% of our branches. Moreover, visitors to branches decreased further with the increase of online banking, so I ultimately decided to reduce the branches by 40%.

Some customers complained that they were unable to visit a branch by foot and needed to take multiple trains to get there. Let's assume that the cost of serving 500 customers is used to maintain a branch that only 100 people visit. It is possible to argue the quality of service for 400 people would be deteriorated. There are always pros and cons when making a change; all I could do was examine the facts thoroughly and make a judgment.

Yomiuri: Please talk about M-tto, a new brand for consolidated financial services targeting individual customers, which MUFG started in June this year.

Mike: We have to admit that our full-scale entry into providing (comprehensive financial services targeting individual customers) was overdue because of system integration work for credit cards, a crucial element of our services targeting individuals. However, we were not sitting on our hands. The executive board has been discussing the (M-tto) concept for a long time.

Our brand is different (to other megabanks' brands because they cooperate with other companies), but we believe our strategy also has a winning formula. The core (service of M-tto) will be self-contained within MUFG's group companies, and all money-related services will be provided within the M-tto framework. We will offer services that meet our customers' needs at each stage of their lives, all the way through to estate planning.

Yomiuri: MUFG originates from four banks. What did you keep in mind for organizational management?

Mike: It's simple: Put the right people in the right jobs. That's it. It's inevitable that (a new bank) will inherit the DNA of its predecessors, so it's important that employees have a mindset of utilizing the DNA of banks they didn't come from. For example, I've conducted reforms on corporate culture so that even presidents and senior managing executive officers are called by their names rather than their titles. That's an idea that comes from a custom at the Bank of Tokyo Ltd.

Two officials in charge of reforms under me -- the executive in charge of human relations and the chief of the human relations division -- were from different banks: Sanwa Bank Ltd. and Mitsubishi Bank Ltd. However, they succeeded in pushing through a cultural shift. Personnel appointment is something that may cause the most friction between employees from different banks. However, because these two officials were put in the right positions, we were able to succeed in sorting things out.

Yomiuri: MUFG has maintained its status as the nation's top bank since its establishment. Why is that?

Mike: When I reflect on the merger from a historical point of view, I could say that (predecessor banks) were able to complement each other very well. Each bank's (regional base) did not overlap, as you can see in the case of Sanwa Bank, which had strength in western Japan, Tokai Bank Ltd., which excelled in central Japan (and Mitsubishi Bank, whose reginal base was the Tokyo metropolitan area). Furthermore, the Bank of Tokyo excelled in international operations, which we were then able to provide to customers of other predecessor banks.

Another key point is that this complementary integration has allowed us, the management team, to make precise decisions to cope with changes in the situation, such as low interest rates and digital technology, based on information provided (by people from each predecessor bank). Fast forward to now, we are accelerating our promotion of recruiting employees abroad, and information provided by our overseas teams has become a strength in responding to U.S. tariff policies, for example.

Yomiuri: What is your vision for growth in the next 20 years?

Mike: International business will be an essential driver for growth. As technologies develop, we also must cope with digitalization, represented by artificial intelligence. It was about 30 years ago when (Microsoft Corp. co-founder) Bill Gates said, "Banking is necessary, banks are not." Various changes have occurred since then, but I believe that changes in the next decade will be more intense and rapid.

Currently, half the world's financial assets are held outside regulated industries (like the banking industry) in nonbank financial institutions (such as investment and pension funds). In the future, MUFG will continue to be a financial institution, even if it's not in the form of a bank. Our important role will be to foster economic growth and social development in normal times and continue to underpin such activities during crises.

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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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October 09, 2025 20:04 ET (00:04 GMT)

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