SMFG Strengthening Wall St Push
(28 April 2023 - United States) Sumitomo Mitsui Financial Group Inc.’s has announced it is increasing its stake in Jefferies Financial Group Inc. to $3.4 billion, marking the latest move by Japan’s top banks to expand abroad as they seek to work around tepid growth prospects at home.
The deal realises an oft-stated desire to own a larger stake in the US investment bank, a move that could give Japan’s second-largest lender a springboard to compete with its domestic rivals.
Tokyo-based Sumitomo Mitsui Banking Corp. will be responsible for credit products and debt-capital markets, while Jefferies will cover mergers and acquisitions as well as equity capital markets, according to the statement.
Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are already accelerating a buildup in the US market. Mizuho wants to hire bankers to build its businesses with non-investment grade companies and leveraged buyout financing, its chief executive officer said last year.
Meanwhile, MUFG has said it plans to accelerate lending to global funds and other institutional investors in the US, and recently hired more than 20 people from Silicon Valley Bank to build out its technology, media and telecom banking group.
In an interview earlier this year, SMFG Chief Executive Officer Jun Ohta said the partnership with Jefferies can be stronger.
“For (Jefferies), our balance sheet is attractive and for us, their investment banking capability is attractive,” he said.
The Japanese bank, which purchased 4.5 percent of the outstanding shares of Jefferies in 2021, intends to increase that investment to as high as 15 percent in economic ownership, the companies said in a joint statement Thursday.
MUFG, Japan’s biggest bank, invested $9 billion in Morgan Stanley during the global financial crisis in 2008, and now has a 22.7 percent stake, according to data compiled by Bloomberg. The banks set up two Tokyo-based brokerage ventures in 2010.
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