8.09.2004

The Day's of UFJ's Lives

The UFJ saga is getting more and more interesting as each day passes. On the surface this looks like a lose-lose situation for either Sumitomo Mitsui FG or Tokyo Mitsubishi FG. UFJ has a mountain of bad loans that is rising everyday like the peak of a volcano about to erupt. "On Friday, UFJ reported a 91.6 billion yen group loss for the fiscal first quarter ended June 30 as bad loans jumped to more than a tenth of lending and costs for writing off problem loans quadrupled." (Bloomberg.com)

The volcano is about to erupt as the bidding war staggers through yet another round like a horse that should have already been put out to stud.

If you look at the logistics of this whole deal the only reason it makes sense for either SMFG of TMFG to buy UFJ is that it will make either entity the largest bank in the world. Not for nothing but whatever bank goes through with this must fire every single board member on UFJ. It is not hard to run a profit turning bank. In America there aren' too many insolvent banks..in Japan almost every bank is. In fact, TMFG is the only wholly Japanese owned and operated bank in Japan turning a profit. "Mitsubishi Tokyo is the only one with the financial means to inject money into UFJ." says Giovanni Brambilla of Anima SA in the Bloomberg article; which reinforces my main point exactly.

Does Japan really need the largest bank in the world? It already has the second largest in Mizuho. That bank i sso large that it is impossible for it not to make money but month in, month out it struggles to turn even the slightest profit. It has slowly turned itself around, but still has a long way to go.

It still is not as bad as UFJ, which has been estimated as the most unprofitable bank in Japan. MTFG finally turned itself around. It would be committing suicide by acquiring UFJ. That would put it right back into the red. I don not understand why Japanese banks do not ike to make money. TMFG has a great thing going right now. Why spoil it just to become the biggest bank in the world? Call me crazy but isn't being the most profitable bank in one of the fastest growing economies in the 1st world, if not the fastest, enough right now? Let's just hope the Japanese do not go down the same road they did in the late 80's and let inflation and more bad loans destroy their economy again. That would be a travesty of gigantic proportions.

Puzzling

Yahoo! Search Results for Shoko GOTO. Who the hell is Shoko Goto?? Hundreds of people have found my site looking for this girl/woman. If someone can please enlighten me as to who she is I would appreciate it.