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MUFG’s consumer finance deals show southeast Asia is Japan’s banking future

The purchase of Home Credit’s businesses in the Philippines and Indonesia fits with a trend to seek growth outside Japan.

Photo: Reuters

MUFG’s decision to buy two southeast Asian consumer finance businesses fits in with a theme it has articulated for some years: to compensate for low growth and miserable demographics in Japan by gaining exposure to markets with very different dynamics.

Today [November 24], MUFG said it would acquire 100% of the shares of HC Consumer Finance Philippines and 85% of the shares of PT Home Credit Indonesia. Both of these businesses are subsidiaries of the Dutch-headquartered (but Czech-controlled) consumer finance company Home Credit.

MUFG, through its Thai Bank of Ayudhya and Indonesian ADMF subsidiaries, will pay €596 million for the acquisitions. Bank of Ayudhya, also known as Krungsri, will hold the lion’s share: 75% stakes in each business, with MUFG Bank holding 25% of the Philippines company and ADMF 10% of the Indonesian.

Clear logic

The context to all this has been explained to Euromoney by a sequence of MUFG executives in recent years: Kanetsugu Mike, Nobuyuki Hirano, Takayoshi Futae and Aki Tokunari.

In the decade since 2012, MUFG has bought stakes in VietinBank in Vietnam, Security Bank in the Philippines, Danamon in Indonesia and the Bank of Ayudhya purchase, alongside an entry into and exit from CIMB in Malaysia, and alliances in Myanmar and Cambodia.

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