By Kentaro Otsuka and Takashi Yamazaki / Yomiuri Shimbun Staff Writers

Nobuo Kuroyanagi, the first president of Mitsubishi UFJ Financial Group Inc. $(MUFG)$, said he concentrated on "being fair" during the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. 20 years ago that formed MUFG.

The 83-year-old Kuroyanagi, who is now an honorary adviser to MUFG Bank Ltd., reflected on the merger during an interview with The Yomiuri Shimbun. Oct. 1 marked the 20th anniversary of the establishment of MUFG. He had been the president of Mitsubishi Tokyo Financial Group before the merger.

Kuroyanagi said he had worked hard to maintain a balance between the two banking groups in terms of staff appointment and the location of branches. "I wanted our employees to understand the importance of fairness to us after the merger (regardless of which bank they came from)," he said. "That was the only thing I cared about."

The following are excerpts from the interview.

The Yomiuri Shimbun: What was the background behind the merger between Mitsubishi Tokyo Financial Group and UFJ Holdings (in 2005)?

Nobuo Kuroyanagi: I believe that UFJ Holdings' problem of non-performing loans became increasingly serious (in 2004), raising questions whether the company had enough equity capital (to maintain international operations).

On the other hand, we (Mitsubishi Tokyo Financial Group) had a relatively ample supply of equity capital -- though it wasn't built overnight -- thanks to the trust of our customers (and efforts of past employees). At the same time, although the amount of personal deposits we held wasn't less (than other banks), an issue remained in the foundation that supported transactions with corporate clients. Considering UFJ Holdings' non-performing loan problem, it was likely that (the aims of the two sides) were aligned in a relatively short period.

Yomiuri: The two banking groups were thought to complement each other, weren't they?

Kuroyanagi: Ultimately, we both had an overarching sense of urgency -- we didn't think about the merger based on specific issues, such as the profits and losses (of each company.) (In 1996,) Mitsubishi Bank Ltd. merged with Bank of Tokyo, and later, Mitsubishi Trust and Banking Corp. joined the group. Thinking from the perspective of customers, I thought that adding the customer base (of Sanwa Bank Ltd.) in the Kansai region and the customer base (of Tokai Bank Ltd.) in Nagoya to the group would drastically improve its regional balance. (Sanwa Bank and Tokai Bank had previously merged to form UFJ Bank Ltd.) Specifically, I thought that Bank of Tokyo's international network would hugely benefit customers in the Kansai region and Nagoya.

Yomiuri: The merger created a huge financial group. What were your thoughts at that time?

Kuroyanagi: At the time, I believed that my job was to form the structure of the entire group, instead of focusing on individual banks. Fortunately, the structures of the two financial groups were the same -- subsidiaries of UFJ Holdings, including securities and leasing companies, were directly hooked to the parent company. If the two merged, all subsidiaries would be directly placed under the new company. One of my goals was to create a financial group with a structure that was easy for customers to understand.

I also had an awareness that we should help the global activities of customers. My biggest objective was to serve Japanese corporate customers that were developing their business overseas. I thought there was no point in establishing a new financial group if we couldn't achieve that goal.

Yomiuri: You did not face major problems in integrating systems of the banks. How did you handle it?

Kuroyanagi: We had a lot of experience regarding banking systems, but (system) failures are very scary. It causes lots of trouble for customers and erodes trust in banks. I wasn't in charge of systems at the time, but people who had long been responsible for systems remained at the levels of acting department chiefs, each leading teams of 40 to 50 staff. Not everything went exactly as planned, but we have learned that nurturing personnel is important. I owe that to those who came before me.

Yomiuri: When the merger took place, what did you do to preserve the preexisting strengths?

Kuroyanagi: There are three important things in (managing) organizations: fairness, teamwork and globalization. During the merger, I was particularly conscious of fairness. We've concluded it was appropriate to locate the new bank's Osaka headquarters at the (former) head office of Sanwa Bank, and the Nagoya headquarters at the (former) head office of Tokai Bank. We appointed as the deputy presidents of the new bank (in charge of regional affairs) those who had been employees of Sanwa Bank and Tokai Bank. It would have been possible for Tokyo-based (Bank of Tokyo-Mitsubishi Ltd.) to take the initiative in everything, but we wanted all parties to participate. I wanted our employees to understand the importance of fairness to us after the merger (regardless of which bank they came from). That was the only thing I cared about.

I don't think that the (merger) took place to rescue (UFJ Holdings); it was more a product of the environment. Owing to (our customers and) past employees, we had relatively ample equity capital. Other banks (involved in the merger) had also worked hard on maintaining their ties with customers, so if (the merger) created an awkward atmosphere, customers of Sanwa Bank and Tokai Bank would feel uncomfortable. Then (the merger) would have been meaningless.

Yomiuri: In 2008, MUFG invested in Morgan Stanley. The decision was made swiftly. What was the reasoning behind the move?

Kuroyanagi: That would be the collapse of Lehman Brothers, an incident no one had expected. However, we also were concerned that our investment banking operations were significantly lagging behind those of overseas (financial institutions). I thought we needed to slightly change how we helped our (Japanese) customers so that we could cope with their management strategies. As the clients were becoming increasingly global, I thought that we needed to help clients conduct mergers and acquisitions overseas, instead of continuing to just help such activities in Japan.

Of course, (the investment) wasn't something we could do unilaterally, so we coordinated with financial authorities such as the U.S. Treasury Department. Together with the U.S. government, we acted to ensure financial stability for the sake of the American people, helping individuals to return to more comfortable lives.

Yomiuri: Do you think that responding to the needs of customers will help your company correspond to the changing times?

Kuroyanagi: That's the most important thing. Organizations like governments and companies each have social missions. So, what's the social responsibility of private financial institutions? First and foremost, we must gain the trust of customers. Our systems should be stable, and nowadays it is crucial to develop digital technologies and artificial intelligence.

I've always been telling junior colleagues to "visit the front lines again and again." When I was the chief of the human resources department (at Mitsubishi Bank) or deputy president (at the Bank of Tokyo-Mitsubishi), I visited branches across the nation. I didn't stay long at each branch, but I still grasped the atmosphere, and that resonated with customers. Horizontal teamwork (within the workplace) is important, but vertical teamwork between seniors and juniors is also vital. It is important for bank employees to always think about the role of banks and study customers and what's happening at workplace within those two frameworks.

The most important thing is to put the customers first. It's essential to think about how to help the customers when they are trying to adjust to changes in time and the social environment. That will ultimately lead us to keep up with the changing of the times.

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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 11:40 ET (15:40 GMT)

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