MS and MUFG: Two cultures, one winning formula?
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MS and MUFG: Two cultures, one winning formula?

Morgan Stanley’s joint venture with MUFG in Japan makes sense on paper, combining international reach with domestic Japanese corporate and retail strength. But cultural differences meant few gave it much of a chance when it was announced. Six years on, it is proving the doubters wrong. How?

Illustration: Paul Daviz

Received wisdom has it that joint ventures do not work, especially in Japan. This is a place where, even 10 years after the domestic merger to create Mizuho, it is said that there is still one café used by ex-Dai-Ichi Kangyo employees and another by the ex-Fuji staff. If that is what happens in a purely domestic consolidation, what chance does a venture between the biggest of all Japanese commercial houses and the most blue-blooded of Wall Street investment banks have?

That was the prevailing wisdom when Morgan Stanley and MUFG announced their intentions to form a joint venture in the post-financial crisis uncertainty of March 2009 – by which time MUFG was a big shareholder in the US bank, having helped prevent it from going the same way as Lehman Brothers the previous year. 

It was a perception that gained strength when a baffling two-company structure was announced that November, by which time the only other comparable joint venture, between Citi and Nikko, had dissolved when Citi sold Nikko’s underwriting businesses to SMBC in October. 

But the really odd thing is it has worked. The joint venture, this “strange new hybrid animal in the Japanese zoo,” as a competitor describes it, is a leader across investment banking and among the most profitable businesses in its peer group.

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