Yomiuri Shimbun Staff Writer

Mitsubishi UFJ Financial Group Inc. (MUFG) aims to expand the firm's project finance capabilities by focusing on its areas of expertise, an executive said in an interview with The Yomiuri Shimbun. "We must selectively expand in areas where we excel," said Fumitaka Nakahama, head of the Global Corporate & Investment Banking (GCIB) Business Group.

Specifically, he indicated plans to increase the number of deals in which the firm serves as lead arranger in asset sectors, such as data centers and semiconductors, to expand underwriting fees and other non-interest income.

The following is excerpted from the interview.

The Yomiuri Shimbun: What are the challenges facing GCIB?

Fumitaka Nakahama: MUFG is the largest banking group in Japan, but globally, we must compete in markets where European and U.S. banks dominate. We need to do more than just go head-to-head; we must selectively expand in areas where we excel. Specifically, in project finance, we will secure deals in sectors such as data centers, semiconductors and GPUs (graphics processing units).

Yomiuri: What is necessary to secure deals?

Nakahama: Securing the role of lead arranger is the most important factor. We need to become the bank that clients consult with first and be recognized by the market as "strong in this area." It's not just about taking on deals; the key question is whether we can attract investors to purchase the loan receivables.

Demand for investments in alternative assets is growing, and insurance companies are also entering the market. The role banks is shifting toward "structuring" -- that is, viewing projects from the perspective of institutional investors and tailoring them into investments that ensure an appropriate risk-return profile.

Yomiuri: What asset sectors are you focusing on in project finance?

Nakahama: We want to cover the entire ecosystem in the AI-related digital infrastructure sector. Data centers are at the downstream end, GPUs in the midstream and semiconductors at the upstream end. We can support data centers through project finance and GPUs through "structured finance," which provides funding by focusing on a company's assets and operations.

We are also turning our attention to semiconductor and component manufacturers. Their manufacturing bases are primarily located in Asia.

Asia is MUFG's "second home market," and it is important to consider how we can financially support the entire supply chain.

Yomiuri: Concerns are also growing about overinvestment in data centers. What is your view?

Nakahama: The key is to understand the business conditions of the big tech companies known as "hyperscalers." We need to assess whether they can cover capital expenditures with revenue from their existing businesses. In the large-scale gigawatt-class data center projects structured by MUFG, approximately 90% of the financing has been sold to investors, allowing us as a bank to manage risk appropriately.

While the United States is currently the primary focus, demand for project financing for data centers is also growing in Asia and Europe. We will leverage the expertise we have cultivated in the United States and elsewhere. On the other hand, AI is closely tied to national policy. We need to assess the intended use of data centers -- including from a geopolitical perspective -- and make decisions on a case-by-case basis.

----

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.

YDN-M0000230761-1