By Kentaro Otsuka / Yomiuri Shimbun Staff Writer

The establishment of Mitsubishi UFJ Financial Group Inc. $(MUFG)$ in October 2005, through the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc., resulted in the formation of the current structure of Japan's financial industry comprising of three megabank groups.

"Regardless of whether it was good or bad, globalization and digitalization advanced, and we were required to address risk management issues at a different level. Without achieving a certain scale (through corporate consolidations), it would have been difficult to handle (the situation)," said Ryosuke Tamakoshi, who had been president of UFJ Holdings, on the circumstances surrounding the establishment of MUFG, during a recent interview with The Yomiuri Shimbun.

Tamakoshi currently serves as an honorary adviser for MUFG Bank Ltd. The following is excerpted from the interview.

The Yomiuri Shimbun: What kind of discussions took place within the UFJ side prior to the announcement of the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings?

Ryosuke Tamakoshi: At the time, UFJ was not an exception in aspiring to expand its services globally and build relationships with customers worldwide. Unfortunately, however, UFJ had fallen behind, plagued by such issues as the need to dispose of non-performing loans.

With competition (with other banks) also taken into account, we needed to grow quickly. We had other options on the table, such as having more public funds injected or increasing our capital (to rebuild our business), but we believed a merger with another group would be a leading option in that it would generate the greatest freedom (in management) and could be done quickly.

When it came to choosing which group to partner with, we didn't have many options. Among those few, Mitsubishi Tokyo was similar to UFJ in terms of group management structure, as it had units for banking, trust banking, securities and credit card businesses under its umbrella. (The UFJ group) included Nagoya-based Tokai Bank Ltd. and Osaka-based Sanwa Bank Ltd., (the Mitsubishi Tokyo group) included the Bank of Tokyo Ltd. and Mitsubishi Bank Ltd. The two groups also looked complementary based on the (clients) of both ranging from major companies to small and midsized companies. And crucially, we considered (Mitsubishi Tokyo) as being the most financially stable.

Yomiuri: What prompted consideration of the merger?

Tamakoshi: (Takamune) Okihara became president of UFJ Bank Ltd. and I became president of UFJ Holdings (in 2004). We were both newcomers (among Japanese bank executives). I believe it was during a meeting over a meal with (Shigemitsu) Miki (who was chairman of the Bank of Tokyo-Mitsubishi Ltd.) and (Nobuo) Kuroyanagi (who was president of Mitsubishi Tokyo) in early July (2004), as part of our courtesy visits (to other banks). It was like an initial charge in a sumo bout (out of nowhere, both sides spoke up). When we parted, I think we talked about having another meeting. So I think it was at that time that the direction (toward a merger) began to be forged.

(After several further exchanges), we made an announcement on the merger at a press conference on July 16. At that point, details had yet to be finalized, but it solidified a bit more the path the four of us had embarked on at the early July meeting. It took some time to decide on the (merger) ratio and the schedule. At the holding company level, the ratio was of course a very significant consideration. Getting this wrong would lead to a "no" from shareholders, so we had no choice but to take our time.

Yomiuri: How did you aim to leverage what UFJ had built even after the merger?

Tamakoshi: Working together, people from both (Mitsubishi Tokyo and UFJ) naturally encountered surprises. Among former UFJ colleagues, you could somewhat predict how a certain statement would be received, but that wasn't always the case (with Mitsubishi Tokyo). Ultimately, we gradually came to understand each other through mutual respect and frank communication. It meant translating (what the other person was saying) in our minds, bit by bit, to reach a mutual understanding.

Yomiuri: You served as MUFG's chairman until 2010. What did you focus on in organizational management right after the merger?

Tamakoshi: As chairman, I didn't get deeply involved in front-line operations. Immediately after the merger, we still needed capital. We also had to complete the repayment of public funds. So I focused my efforts on capital policy and gaining shareholder approval.

As I still had opportunities to visit our clients, I went to see some staff working at sales divisions or in branches. I tried not to differentiate between former UFJ branches and former Mitsubishi Tokyo branches. Speaking to staff on the front line, who were apparently busy handling many unfamiliar things shortly after the merger, I asked for their patience and told them to ensure that customers were not inconvenienced.

Yomiuri: MUFG Bank's current deputy presidents stationed in Osaka and Nagoya had been employed at UFJ.

Tamakoshi: I thought having those deputy presidents would facilitate communication with appropriate local stakeholders. It makes it easier to absorb various customer trends and local demands, and I think that's overwhelmingly beneficial. If a deputy president suddenly arrives in an area where they have little in the way of past connections and says, "This region is important for us," it might be hard for people there to believe.

Yomiuri: Would you say the merger was a success?

Tamakoshi: I believe the merger itself was unavoidable. Looking at MUFG's current standing, I think it was for the best. Of course, there are what-ifs -- saying things like "merging with another group would have been better" -- but that's just fiction, and there is no end to such thinking. I mean, if we start down that path, we'd end up talking about how things could have been done differently 30 or 40 years ago.

I think this applies to any merger, not just MUFG: the key point is mutual respect. Regardless of which pre-merger company an employee comes from, they must be respected in workplace interactions. It's important to build relationships where no one looks down on another or unduly belittles themselves. It's important to be straightforward; that's how we went about it.

Yomiuri: After the merger, you had a number of acquisitions and also invested in Morgan Stanley.

Tamakoshi: Regarding Morgan Stanley, at that point (in 2008), we became a major shareholder by injecting capital. We have respected what they do both in the United States and globally, and I believe they have continued to hold a certain level of respect for us as well.

I think it was crucial that we both knew each other's struggles at the time (following the collapse of Lehman Brothers) and shared the commitment to work together. I don't think it ever works if investors just put up money and then try to control everything, treating people like tools.

Yomiuri: How do you assess the reorganization of Japan's financial system into a three-megabank structure?

Tamakoshi: I think that's something our customers should be the judge of. But I wonder if we could have competed in the international market if we had remained in the era before the consolidation into three megabanks, when there were over 10 city banks. Regardless of whether it was good or bad, globalization and digitalization advanced, and we were required to address risk management issues at a different level. I wonder if the structure with over 10 city banks could have addressed the situation. I think it would have been difficult unless (the banks) achieved a certain scale.

Yomiuri: What do you hope for MUFG going forward?

Tamakoshi: As customers are changing too, we must take it into account in advance, and transform our services, or how services will be provided. I hope the group will work hard on it.

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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 07, 2025 11:35 ET (15:35 GMT)

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