Holiday Roundup: MUFG buys 21% of Morgan Stanley, Aso greenlights bailouts for regional banks, and foreign reserve funds to the IMF?

October 13, 2008
By Ken Worsley

As Mitsubishi UFJ scored itself a sweetened deal to acquire a 21 percent stake of Morgan Stanley for about $9 billion in cash, Bloomberg’s William Pesek wonders if Japan should be buying gold instead of Morgans.

Pesek sums things up well in his final paragraph:

Whatever Mitsubishi UFJ decides, one thing is clear: The risk of buyer’s remorse has never been bigger in a global system that has never been so shaky.

To help manage the risks involved, MUFG is getting two-thirds of its investment in preferred stock.

Last October, when Japan brushed off the notion of using foreign reserves to seed a sovereign wealth fund, one government official told the media this:

…[I]t is not desirable for the government to manage foreign assets and invest in various ways aggressively…It is important that our reserve management has a neutral impact on markets.

Now we have Finance Minister (and Financial Services Minister) Shoichi Nakagawa saying, “If the IMF requires additional resources, Japan stands ready to supplement needed funds.” Those funds would come directly from Japan’s foreign reserves.

And earlier today, Nakagawa told reporters that Japan has not received “a direct request from the United States to buy additional U.S. Treasuries using its foreign reserves.” One assumes that US requests would be in line with IMF needs.

At the same time, the government and the Bank of Japan have said that they will put a freeze on selling any of the 2 trillion or so yen worth of bank shares that were bought up from 2002-2006.

Meanwhile, according to the Nikkei, “Prime Minister Taro Aso instructed Finance Minister Shoichi Nakagawa on Monday to consider protecting deposits fully in case of bank bankruptcy to help ease depositors’ concerns amid the global financial crisis.”

Finally, since today was Sports Day here in Japan, it’s fitting that the baseball season ended for our local team, the Tokyo Yakult Swallows, last night. It was good to see they boys win their final game last night, and to see Kousei Ono circle the bases in tears after hitting a game winning home run in his final at-bat. I was at about 20 games this year, and there weren’t too many wins in there. Here’s to hoping that some better business sense is put into the team in this offseason compared to the last.

Of course, that other Tokyo team will be going to the playoffs, but nobody watches them, right?

Filed Under Business, Finance