By Masaki Sugiyama and Takashi Yamazaki / Yomiuri Shimbun Staff Writers

The establishment of Mitsubishi UFJ Financial Group Inc. $(MUFG)$ in 2005 came out of a decision that the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. would be the "best" option, said Minoru Sotome, a deputy president of MUFG Bank Ltd., during a recent interview with The Yomiuri Shimbun.¯

Sotome has a long history of engagement in planning operations and closely witnessed what took place on the UFJ side as a public relations official during merger negotiations with Mitsubishi Tokyo. He currently oversees MUFG Bank's operations in western Japan.

Multiple candidates emerged as a merger partner for UFJ, Sotome recalled, saying, "Our discussions centered on how to protect our customers, the businesses of our client companies, their employees and our own employees." Regarding the decision to merge with Mitsubishi Tokyo, he said, "We judged it to be the best option in terms of complementing each other in market (outreach) and human resources."

The following is excepted from the interview.

The Yomiuri Shimbun: What was the situation like when UFJ was exploring mergers with other companies?

Minoru Sotome: UFJ was struggling to find ways to survive, facing such issues as inspection avoidance being uncovered over the so-called nonperforming loan problem, when the decision was made to merge with Mitsubishi Tokyo. I was involved in public relations tasks related to corporate management at UFJ at that time. Media outlets formed dedicated teams and intensively covered us. Just from The Yomiuri Shimbun alone, I interacted with perhaps 10 or 20 reporters. I was extremely busy, and it was a very intense period of time indeed.

I was connected by mobile phone to all relevant department heads and executives. I could call them anytime in the capacity of a deputy public relations department manager and obtain all internal information. Not all information was completely open, and there were things I could and couldn't tell (reporters). I tried particularly hard to prevent misreporting.

Yomiuri: Initially, there was a plan to merge Sumitomo Trust and Banking Co. and UFJ Trust Bank Ltd.

Sotome: Although we were trying to survive by ourselves, the momentum of restructuring was growing across the entire industry. Due to the nonperforming loan problem, our leadership changed. After the new president took the helm, we were in contact with other banks and that was when the plan began to be floated.

Our (internal) discussions were solely focused on how to protect our many customers and client companies, as well as their employees and operations, and also our own employees.

Of course, we conducted "brain exercises" where we considered multiple (scenarios). We ultimately (concluded that) the combination (with Mitsubishi Tokyo) was best. We judged that it would create strong market complementarity, could form a top-tier bank and could resolve our financial challenges at the time. Also factoring in personnel complementarity, we considered it would be the optimal pairing, as far as I remember.

We wanted to maintain our position as a bank meeting international standards, rather than just being a bank in Japan. We also judged that, not only for protecting the livelihoods of our employees but also for preserving their motivation, it would be better to seek the establishment of a structure with which we would be able to aim for top-tier status. We considered that whether or not we were in a superior position (compared to the merger partner) would not matter to our customers and employees, and would therefore not be a fundamental issue.

Personally, I feel I did something unfair to those at Sumitomo Trust with whom I had connections at that time. However, from the perspective of what form we needed to take to achieve our goals 10 years or 20 years down the line, we had no choice but to proceed (with a merger with Mitsubishi Tokyo). In retrospect, it was not the wrong decision.

Yomiuri: Do you think the announcement of a planned merger between Sumitomo Trust and UFJ Trust (which was later canceled) significantly stimulated discussions with other megabanks?

Sotome: I believe that was a factor.

Yomiuri: (UFJ) received public funds. Was there a desire to avoid de facto nationalization?

Sotome: Nationalization would have been a last resort. As a private company, we naturally thought we should strive to survive through our own efforts. We were wondering how we could survive. We wanted to come out on top if possible. And we strongly wanted to protect our many customers and employees.

Yomiuri: While UFJ's merger negotiations with Mitsubishi Tokyo were suspended, Sumitomo Mitsui Financial Group Inc. proposed a merger (with UFJ).

Sotome: I heard they offered favorable terms, including on the merger ratio. However, we discussed such matters as whether (the merger with Sumitomo Mitsui) would ultimately protect our many customers and employees 10 or 20 years later, whether we could conduct business with the pride befitting a top bank and whether we could expand globally. We thought that, if we ended up being a mere domestic bank, we would betray the expectations of our many customers and would see our employees leave.

We then considered which combination would be best. The 1:1 merger ratio (proposed by Sumitomo Mitsui) might have sounded good, but we thought that things do not actually work out that way in the business world.

Yomiuri: What do you think is crucial in corporate mergers? At the time of the MUFG merger, it was said that differences in corporate culture and employee mentality were apparent between the former Mitsubishi Bank Ltd. and the former Sanwa Bank Ltd. (on the UFJ side.)

Sotome: It's about mutual respect. I think it means squarely looking at each other's strengths and weaknesses, and discussing what products and services would be best from the customer's perspective and what (should be done) if economic rationality is taken into account.

In our case, it was not like both sides belonged to entirely different industries. The quality of employee was not that different either. While there were differences in client bases, corporate group structures, regional strengths and area of focus -- corporate or retail banking -- I felt there were not any major differences at the core.

That said, differences in business practices and management philosophies did exist. For example, the former Sanwa Bank and UFJ tended toward a relatively "middle-top-down approach," where department heads and deputy managers held significant influence at the headquarters. Regarding the former Bank of Tokyo-Mitsubishi Ltd., meanwhile, I had the impression of it being close to top-down.

Still, since our goals and the shared values we should prioritize were not fundamentally different, I believe we have progressed toward better outcomes through mutual respect.

Yomiuri: Being in charge of the western Japan operations, what's on your mind now?

Sotome: In terms of the economy as a whole, it's about industrial renewal. Generational shift in the era of large-scale (management) successions is part of it, but ultimately, the economy won't grow unless we generate new technologies, services and innovations. By creating the foundation for supporting such industrial renewal, we as a financial group intend to promote it. By doing so, we aim to strengthen the domestic economy and enable (the Japanese economy as a whole) to win in global competition.

As for western Japan, I think it's necessary to decentralize various functions to regional areas, rather than having everything concentrated in Tokyo. If we don't intentionally pursue this, centralization will only accelerate. We hope to create a new wave originating from major cities in western Japan, whether that's Osaka, Kyoto, Kobe, Hiroshima or Fukuoka.

Nothing can begin without people. So how to attract people is crucial. With the nation's population shrinking, I don't think we could work on that many (initiatives) for regional revitalization. Even so, I think we must push forward with it anyway. Otherwise, we'll just end up with further centralization.

(Yamazaki is chief of The Yomiuri Shimbun's Office of Senior Writers.)

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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 20, 2025 07:52 ET (11:52 GMT)

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