Filing under Rule 425 under the U.S. Securities Act of 1933
Filing by: Mitsubishi Tokyo Financial Group, Inc.
Subject Company: UFJ Holdings, Inc.
MTFG SEC File No. 1-10277
MTFG
Mitsubishi Tokyo Financial Group
Nomura Investment Forum
December 6, 2004
This document contains forward-looking statements in regard to forecasts, targets, plans etc. of Mitsubishi Tokyo Financial Group (MTFG) and its group companies. These forward-looking statements are based on information currently available to MTFG and are stated here on the basis of the outlook at the time that this document was produced. In addition, in producing these statements certain assumptions (premises) have been utilized. These statements and assumptions (premises) are subjective and may prove to be incorrect and may not be realized in the future. Underlying such circumstances are a large number of risks and uncertainties. Please see our latest Annual Report and other public filings for additional information regarding such risks and uncertainties.
In addition, information in regard to companies and others etc. outside MTFG or the Group that is recorded in this document has been obtained from publicly available information and other sources. The accuracy and appropriateness of that information has not been verified by MTFG and cannot be guaranteed.
Figures used in this report are defined as follows:
Consolidated : MTFG Consolidated.
Sum of the 2 banks : Sum of the non-consolidated figures for BTM and MTB on a simple combined basis.
1
Contents
Background of the Management Integration
MTFG at a Glance
Change in Japan’s Financial Environment
History of MTFG
“Consolidated Management”
Focus of the New Management Strategy
MTFG’s Core Competence and Challenges
Determination of Management Integration
Business Base of the New Group 1, 2
Strategy of the New Group
Schedule and structure of Management Integration
Expanding business Opportunity through Management Integration
Examples of Expanding Business Opportunity
Segment Strategy - Retail 1, 2
Segment Strategy - Corporate 1, 2
Segment Strategy - Trust Assets 1, 2
Effective Use of Resources
Review Domestic and Overseas Branch Network and New Channel Strategy
New Group - Management Structure
New Group - Business Management Platform 1, 2
New Group – Shared Personnel Platform
Summary
Appendix
Current Status of Principal Products & Services 1, 2, 3
2
Background of the Management Integration
MTFG at a Glance
MTFG
Bank of Tokyo-Mitsubishi
Mitsubishi Securities
UnionBanCal Corporation
The Mitsubishi Trust and Banking Corporation
Other subsidiaries 150 Affiliate companies 24
(as of end of Mar. 2004)
Key Indexes of MTFG (Consolidated)
Total Assets JPY 113.4 TN
Total Loans JPY 47.4 TN
Total Deposits JPY 67.0 TN
Equity Capital JPY 4.3 TN
BIS Ratio 10.92%
No. of Employees 44,111
(Prompt report)
(as of end of Sept. 2004)
4
Change in Japan’s Financial Environment
Resolve the excess borrowing problem with its level down to pre-bubble condition
With “Japanese big bang” as a turning point, business chance has been expanded as deregulation proceeds
Trends in Nominal GDP Rate to Balance of Interest Bearing Debt in Corporate Sector
Real GDP (Year on Year, Left Axis)
Balance of Interest Bearing Debt to Nominal GDP (Right Axis)
(%) (%)
20 130
120
15
110
100
10
90
5
80
70
0
60
-5 50
80 82 84 86 88 90 92 94 96 98 00 02 04
(Year)
(Note) Balance of interest bearing debts = Borrowings + Bonds
(Source) Cabinet Office “National Economic Accounting” and Bank of Japan “Statistics of Funds Flow”
History of Financial Deregulation
1994
Full deregulation of interest rates for ordinary deposits
1996
Removal of ban on mutual participation in life insurance and casualty insurance
Financial Big Bang
(Nov.1996~)
1998
Revision of Foreign Exchange Law
Deregulation of Foreign Trade and Investment
Sales of trusts at banks permitted
Financial holding companies permitted
1999
Restraints on subsidiaries engaging in different types of business removed
2001
2004
Partial lift of ban on sales of insurance products by banks
Lift of ban on capital market intermediary business and securities brokerage business
5
History of MTFG
Implement strategy focusing on “quality of business” by taking into consideration globalization and deregulation of the financial sector
Pursue maximization of customer satisfaction by enhancing products/services
Changes in internal and external environment
Financial globalization
Diversification of customer needs
Financial deregulation
Accelerated restructuring of Japanese financial groups
Recovering from asset quality and stockholdings problems
Further deregulation
History of MTFG
1880
(The Bank of Tokyo, Ltd. and Mitsubishi Bank Ltd. were established)
1927
···
(The Mitsubishi Trust and Banking Corporation was established)
Apr. 1996
The Bank of Tokyo-Mitsubishi, Ltd. was established
Apr. 2001
Mitsubishi Tokyo Financial Group, (MTFG) was established
Oct. 2001
The Mitsubishi Trust and Banking Corporation, Nippon Trust Bank, Ltd., and Tokyo Trust Bank, Ltd. merged
Sep. 2002
Mitsubishi Securities Co., Ltd. was established
Feb. 2004
“Global Top 10” strategy was announced
“Evolution” of MTFG
Establish Japan’s preeminent global network
Become a comprehensive global financial group providing diversified and high-quality services
Provide enhanced and sophisticated trust services
Provide “comprehensive securities services” ranging from retail to wholesale
Prepare a new system leveraging its strengths in banking, trust services, and securities business
6
“ Consolidated Management”
Changes in customers’ needs
Retail
Shift from safe deposit to investment with higher risk
Increasing needs for inheritance services and pensions and life insurance
Corporate
Increased needs for business reorganization and financial efficiency (shift to direct financing)
Acceleration of globalization including expansion of SMEs’ global businesses
Shift to
“Group consolidated management” (announced on Feb. 2004)
Develop integrated business strategy of bank, trust and securities company
Change in business portfolio (Strengthen Middle / Retail segment)
Enhance profitability and shareholders’ value
Aiming to be one of the “global top 10”
MTFG
Recovering from asset quality problem and stockholdings
Solid capital/financial base
Full line of banking/trust banking/securities/global functions
Global network
Shift management attention to “offensive strategy” from “defensive strategy”
Deregulation and market development
Gradual removal of hedges separating banking, trust services and securities
Restructuring of postal savings and postal life insurance
Review functions of public financial institutions
Expansion of market for indirect financing based on market principles
7
Focus of the New Management Strategy
A majority of personal finance assets are cash and deposits in Japan. Japanese customers will most likely shift more assets to investment products.
Major foreign banks focus on retail/middle business segment
Comparison of Personal Finance Assets in Japan and US (end of Mar. 2004)
Japan
(JPY 1,412TN)
Other, 3.7%
Insurance, pensions,etc., 27.9%
Cash & deposits, 55.2%
Stocks,etc., 8.2%
Investment trust, 2.4%
Bonds, 2.6%
United States($ 34.9 TN)
Other, 3.2%
Cash & deposits, 13.0%
Bonds, 8.3%
Insurance, pensions,etc., 30.0%
Investment trust, 12.5%
Stocks,etc., 33.1%
Business portfolio of major foreign banks and MTFG
100%
80%
60%
40%
20%
0%
Citigroup
HSBC
Bank of America
JPMorgan Chase
Wells Fargo
MTFG
Retail-Middle*1
Whole sale*2
Asset Management-Private Bank
Others
*1 Total pretax income including retail business, card business and loans to SMEs
*2 Total pretax income including loans to big corporates, investment bank (including brokerage firm profit) and treasury profit
(Quote) Data on major banks as above are pretax income of Dec FY03 quoting from each companies’ IR materials
Sum of the figures of J.P. Morgan Chase and Bank One for J.P. Morgan Chase
Calculate the ratio using net operating profit of BTM and MTB for MTFG
Source: Bank of Japan Research & Statistics Bureau
Comparison of Flow of Funds in Japan and US in 1Q of 2004.
8
MTFG’s Core Competence and Challenges
Core Competence
High-Quality Products and Services/Distribution Channels
Full line of banking/trust banking/securities functions
Corporate brand supported by customers—selected by customers as the number one financial institution
Preeminent global network
Strength in portfolio investment, asset management and consulting business
Advanced IT infrastructure
No reliance on public funds
Financial Base/Capital Strength
Strongest Financial Base/Capital Strength among Japanese Financial Institutions
Trillion Yen
4.0 14%
3.5 12%
3.0 10%
2.5 8%
2.0 6%
1.5 4%
1.0
0.5 2%
0.0 0%
End-Sep.2002 End-Mar.2003 End-Sep.2003 End-Mar.2003
Tier 1
BIS Ratio
Tier1 Ratio
Challenges
Customer base still weak compared with other major financial groups
BTM
134
Mizuho
203
SMBC
222
approx.
15
approx.
26
approx.
26
Eastern Japan
263
Central Japan
22
Western Japan
81
Number of corporate customers (thousand companies)
Number of individual customers (million accounts)
Number of local outlets
Source: Registration at TEIKOKU DATABANK, LTD. as of end-August 2004.
Source: Compilation by MTFG based on IR documents released by MTFG, Mizuho, and SMFG.
Source: Sum of BTM, MTB and MS as of end-Sept 2004.
Profit amount/Business volume smaller than other major financial groups
End-March 2004/Fiscal 2003
MTFG
0.65
Mizuho
0.95
SMFG
1.0
8.3
12.3
13.8
35.7
55.0
36.9
Net operating profits (trillion yen)
Individual loans outstanding (trillion yen)
Corporate loans outstanding (trillion yen)
Note: Source Kessan Tanshin and other documents of each company. MTFG figures are
a sum of BTM and MTB; Mizuho figures are a sum of 3 Mizuho banks + reorganization subsidiary;
SMFG figures represent figures for Sumitomo-Mitsui Bank. All figures are a sum of bank account and trust account.
* Loans to corporations calculated by subtracting individual loans from total loans.
9
Determination of Management Integration
Overcome challenges promptly, and implement aggressive strategies that lead to further growth by taking full advantage of the group’s strengths
Decision on integration
M T F G
Customer base and network
Individuals
“High Net Worth”
“Asset-building”
“Mass Retail”
Corporate
Blue Chip
SMEs
Overseas
Tokyo Metropolitan District
West Japan Region (Kansai)
Central Japan Region (Chubu)
UFJ
Entered into memorandum of understanding relating to the management integration in July 2004
Establish a large comprehensive global financial group with high-quality products/services
Upgrade previous goal to becoming one of the “global top 5” and realizing it promptly
10
Business base of the New Group 1
Retail deposits amounting to more than 60 trillion yen is an important source for retail earning growth
Strong corporate client base is a valuable asset for expanding trust and investment banking services
MTFG+UFJ
59.8 Trilln. yen
Mizuho
30.7 Trilln. yen
SMBC
32.0 Trilln. yen
19.6 Trilln. yen
11.8 Trilln. yen
13.9 Trilln. yen
284 Thou. companies
203 Thou. companies
222 Thou. companies
87.1 Trilln. Yen
64.2 Trilln. Yen
55.4 Trilln. Yen
Amount of deposits1. (As of end-Sep. 2004)
Amount of loans to individuals1. (As of end-Sep. 2004)
Number of corporate clients2. (As of end-Aug. 2004)
Amount of loans and bills discounted3. (As of end-Sep. 2004)
Notes: 1. Figures for personal deposits and loans to individuals are the total of those for banks and trust banks (including trust accounts) on a simple combined basis.
Figures for UFJ and Mizuho include amounts held by certain subsidiaries.
2. Number of corporate clients of banks. Figures are taken from data compiled by TEIKOKU DATABANK, LTD.
3. Consolidated bases.
11
Business base of the New Group 2
Strong customer base that includes mass retail, high net worth individuals and SME to large companies in domestic and overseas market
Well balanced network in Japan and Japan’s preeminent global network
Loan Portfolio (As of End-September 2004)
MTFG
Overseas 10%
Individuals 19%
Large Co., etc. 44%
Small and Medium-sized co., etc. 27%
UFJ
Overseas 5%
Individuals 28%
Large Co. etc. 30%
Small and Medium-sized Co., etc. 37%
MTFG+UFJ
Overseas 8%
Individuals 23%
Large Co., etc. 37%
Small and Medium-sized Co., etc. 32%
Notes: 1. Figures are those for BTM and MTBC on a simple combined basis (the sum of banking and trust accounts).
2. Figures are those for UFJ Bank and UFJ Trust Bank on a simple combined basis (the sum of banking and trust accounts).
Number of Offices in Japan and Abroad (As of End-September 2004)
Overseas
100
81
80
60
40
26
20
0
MTFG UFJ
Japan Total
600
546
500
366
400
300
200
100
0
MTFG UFJ
Central Japan
150
148
100
50 22
0
MTFG UFJ
Western Japan
186
200
150
81
100
50
0
MTFG UFJ
Eastern Japan
300 263
250 212
200
150
100
50
0
MTFG UFJ
Figures for MTFG are those for BTM,MTBC and Mitsubishi Securities.
Figures for UFJ are those for UFJ Bank, UFJ Trust Bank and UFJ-Tsubasa Securities.
12
Strategy of the New Group
Structure and Schedule of Management Integration
<Timetable for Integration>
July 16, 2004 : MTFG and UFJ sign a memorandum of understanding regarding management integration.
August 12, 2004 : MTFG and UFJ enter into basic agreement regarding management integration and establishes an integration committee.
September 10, 2004 : MTFG and UFJ announce Basic Policy Regarding Management Integration and enters into basic agreement regarding strengthening of UFJ Group’s capital.
September 17, 2004 : MTFG purchases preferred shares of 700 billion yen issued by UFJ Bank (capital injection by MTFG).
October 1, 2005 : Management integration with the UFJ Group.
Structure of the Integration
Mitsubishi UFJ Holdings, Inc. (planned name)
Mitsubishi Tokyo Financial Group, Inc. + UFJ Holdings, Inc.
The Bank of Tokyo-Mitsubishi UFJ, Ltd (planned name)
The Bank of Tokyo-Mitsubishi, Ltd + UFJ Bank Limited
The Mitsubishi UFJ Trust and Banking Corporation (planned name)
The Mitsubishi Trust and Banking Corp. + UFJ Trust Bank Limited
Mitsubishi UFJ Securities Co., Ltd (planned name)
Mitsubishi Securities Co., Ltd. + UFJ Tsubasa Securities Co., Ltd.
14
Expanding Business Opportunity through Management Integration
Increase revenue by providing enhanced product/service and by expanding customer/transaction base
Trend toward deregulation further facilitates integrated strategy for bank, trust and securities businesses
Product/Service capabilities
Increase revenue by introducing innovative products/services by fully utilizing resources generated by management integration, such as additional IT/systems investment capacity and human resources
MTFG UFG
Strong product line up
Global network
UFJ MTFG
Convenient direct banking and ATM network
Promote integrated strategy for bank, trust and securities businesses
Targeting further revenue increase by taking advantage of deregulation such as regulatory permission for banks participating in securities brokerage business, capital market intermediary business and amendment of the Trust Business Act.
Revenue opportunity prior to Management Integration
MTFG UFJ
Strong foundation of high net worth customers
Large corporate/overseas business base
UFJ MTFG
Central/Western Japan customer base Mass retail/SME business base
Customer /business base
15
Examples of Expanding Business Opportunity
Combine the strengths of each group to drastically expand business opportunities
Maximize shareholder value while enhancing customer convenience
Retail
Corporate
Business area
Sales of investment products
Consumer Finance
Residential mortgage Loans
SME transactions
Large company transaction
MTFG’s strengths
Strong product line up
Strategic and capital alliance with Acom
Innovative services including BTM-VISA Card
Strong sales capabilities at offices offering campaigned products and other successful products
Preeminent global network Advanced GCMS
Diverse products, including TKC strategic management loans, asset backed loans and credit derivative loans
Equipped with full line products and services including banking, trust banking and securities functions of both groups +MTFG’s global networks
UFJ’s strengths
Strong retail customer base in Central and Western Japan
Leading financial group in the credit card industry
Tie-ups with reputable housing developers
Extensive experience and solid SME customer base
Expanded business opportunity
Expansion of customer base for high return products
Provide high quality consumer finance product and services
Strengthen sales at branch offices in Central and Western Japan
Strengthen sales in Tokyo Metropolitan District through tie-ups with housing developers
Supporting the Japanese customers of UFJ in their overseas expansion
Share UFJ’s business know-how
Offering MTFG’s products designed for SMEs to UFJ’s SME Customers
Expanding business with large corporate customers of both groups
16
Segment Strategy – Retail 1
Strong business foundation - New group will have approx. 40 million customers, retail deposits of approx. ¥66 trillion
Strength of the New Group
1.Scale merit and strong complimentary feature
Diverse and solid customer base ranging from mass retail to high net worth segment
Highly complimentary business and networks
·Geographically balanced network (ex. Less overlapping branch networks in Central and Western Japan regions)
·UFJ :Strength in mass retail segment and ATM network
MTFG:Strength in high net worth segment, foreign currency deposits and individual annuity insurance
·Strength in residential mortgage loans
UFJ :Tie-ups with housing developers
MTFG: Campaign products
2.Full line financial service provided by integrated bank, trust bank and securities company ----“Integrated Business Group System”
3.Develop global business by utilizing overseas network
ex) UBOC, Manulife, etc.
4.Cutting-edge services focusing on the security of customer transactions
ex) IC card, Biometric recognition system, etc.
5.Strengthening support function for promoting wide range of consumer finance business
(card business, consumer finance, credit company, etc.)
6.New products, services and business alliances
Actively enter into a unprecedented alliances
No. of customers and customers assets by customer segment (as of end Mar 04)
Segment by customer assets with MTFG/UFJ
¥10 m+
¥0.5m+
up to ¥0.5m
Number of customers (million)
Approx. 2
Tokyo Metropolitan District 1.0
Central Japan Region 0.3
Western Japan Region 0.5
Approx. 10
Tokyo Metropolitan District 5.0
Central Japan Region 2.0
Western Japan Region 2.5
Approx 30
Tokyo Metropolitan District 15.0
Central Japan Region 5.0
Western Japan Region 7.0
Total retail deposits of new group (tn)
Approx. 40tn
Approx. 25tn
Approx. 1~2tn
( Note.) Total amount of the 4 banks on a simple combined basis (2 commercial banks and 2 trust banks)
17
Segment Strategy – Retail 2
Seek to maximize shareholder value and customer satisfaction by providing highest quality domestic and overseas products/services in Japan
New group’s retail strategy - Vision
Maximize shareholder value
Maximize profit and maintain strong Balance sheet
Enhance business efficiency (net profit/person; expense ratio)
Deliver highest quality products and services to a geographically balanced, sophisticated customer base
Leverage strengths in credit cards and consumer finance to expand revenue generated from the consumer finance business
Utilize the preeminent global network to develop global business
Achieve highest level of customer satisfaction
Enhance customer satisfaction by providing quality service to increase the number of frequent user customers
Branch layout, products, services responding to customer needs
Easy access after business hours/on weekends
Cutting-edge services such as “Comprehensive Card” that are quick, easy to use and convenient
Deliver full line financial services that include banking, trust and securities and global operations
Promote education focused on ‘People’ and ‘Educating people’ at Retail Academy
Encourage thoughtfulness and care “Encourage everyone to actively participate in business development”
Social contribution/Responsibility
Establish Advisory Committee
Contribute a portion of net business profit to society (after repaying public funds)
Contribute to education on asset formation
Launch consumer education program to prevent ‘excessive borrowing’
Compliance
Establish world-class compliance framework
Compliance framework responding to Information Security/Personal data protection Law (including ISO certification)
18
Segment Strategy- Corporate 1
Implement specified strategy for each customer/ business segment to maximize the strengths of both groups
Create synergies, and build new business model
Core competence of the new group
Comprehensive financial services
Full line of “bank, trust, securities, and global” functions
Business/service function
Domestic and foreign network regionally balanced and balanced in scale
Overseas
Leading global network among Japanese banks Strong business base in Asia
Customer base
Outstanding customer base across all customer segments
Market leader
Highest market share in virtually all business areas
IT development capability
Enable convenient and user-friendly domestic and overseas settlement services
Build new business model
Banks’ participation in
Securities brokerage business,
capital market intermediary business,
Corporate rehabilitation business,
Principal investment,
Business succession,
Small business card…
MTFG
Generate Integration synergies
Strategic business areas
Increase loans to SME businesses
Strengthen business in Asia
Domestic and foreign settlement business
EB, Web products, global CMS
Investment banking business
Syndicated loans, derivatives
Trust business
Securities agency business, real estate
Securities business
Strengthen equity business, M&A, Equity trading business
19
Segment Strategy- Corporate 2
Integrate banking/ trust/ securities / global operations - provide top quality service and innovative products worldwide
Maintain preeminent position - No. 1 in domestic corporate business + No. 1 in overseas business for Japanese companies
Large
Of which, MTFG serves as lead position
Non-clients
clients
Approx. 4,000 companies. 75% are clients, of which 30% MTFG holds main bank position
Further developing relationship with existing clients is vital
Mid-sized
Of which, MTFG serves as lead position
clients
Non-clients
Approx. 45,000 companies, approx 50% are clients of which 20% MTFG holds main bank position
Further developing relationship with existing clients and developing undeveloped regional market is vital
SMEs
Of which, MTFG serves as leadposition
clients
Non-clients
Approx. 1.6m companies, 16% are clients, of which 8% MTFG holds main bank position
Developing undeveloped market where a lot of non-clients exist=major opportunity to expand
Large companies
Contribution to clients to increase corporate value by providing full line financial solutions
Multi-line business model
(Industry finance model/ Market-type indirect finance model/ Combined Banking, Securities model/ Risk intermediation model)
Mid-sized companies
Promote main bank relationship with major clients
Develop detailed regional strategy
Multi-faceted support for diverse client needs
(derivatives/small scale securitization/business succession/IPOs/domestic & overseas alliances/business matching/domestic, foreign settlement as major line)
Leverage global network to deliver comprehensive financial solutions
(Support companies overseas development, trade finance, BRICs/Expand in Eastern Europe and other emerging markets, business with European and US multinationals)
SMEs
Build effective and efficient business model
Develop new markets to achieve major expansion of client base
(Strengthen face-to-face and direct channels/Strengthen alliances/ Improve model screening/ Increase non-interest income)
20
Segment Strategy- Trust Assets 1
Generate profits by utilizing dominant market share and combining two group’s know-how in management integration
Create a virtuous circle of “economies of scale” and “improved product/service quality”
Strengths of MTFG
Business base:
Tokyo metropolitan areas
Customer base:
Corporate pension funds, Bank affiliated investment trust companies
Functions: custody services (domestic and overseas), administrative system consulting (pension funds)
Management integration
Overwhelming scale
Assets under management totaling approx. ¥34 trillion
Assets under administration totaling approx. ¥130 trillion
Integration and sophistication of know-how
Strengths of UFJ
Business base:
Central and west Japan
Customer base:
Multi-company employees pension fund, Security company affiliated investment trust companies
Functions: General managing services for pension funds
Further expansion of scale and improvement in profitability
<Pension funds/securities>
Development of high return products, enhancement of products
<Investment trusts>
Establishment of brand name, expand sales channel and enhance support function
·Improve quality of products and services
·Improve price competitiveness
·Respond to new regulations
·Develop computer systems
Solidify top rank position in the market
Realize further efficiency while maintaining dominant market share
Increased efficiencies to enable further investment in product/service quality improvement
21
Segment Strategy- Trust Assets 2
Provide full line service of asset management and asset administration by fully utilizing group capacity
Provide pension fund, securities, investment trust and custody customers with sophisticated products and meticulous service
Pension fund customers *
balance of approx. ¥22 trillion
A full line of management services for corporate and retail assets
Asset management
Asset administration
Defined Benefits
Products oriented: Increase ratio of active-type management products (=high fees)
Plans oriented : Promote packaged service of asset management and administration mainly consisting of balanced-type investment,
Internet communications: Utilize the Internet to promote remote sales structure
Defined contrib.
Corporate: Expand portfolio management and asset administration amount with high level consulting capability
Personal : Tap into the large customer base of the group by utilizing expanded customer base
Securities customers* balance of approx. ¥24 trillion
Public funds/mutual pensions: Make proposals that meet the customer structure (Example: Customize innovative pension products)
Financial institutions: Propose management products which correspond to the risk tolerance level of the customer (Example: Expand private placement of investment trusts)
Corporations: Tie up with the corporate divisions and investigate their needs (Example: Special funds/treasury stock trusts, etc.)
Investment trust* customers
Balance of managed assets approx. ¥4 trillion Balance of administered assets approx. ¥23 trillion
Retail
Establish brand and reinforce sales support; Strengthen partnership with retail divisions
Corporate
Enhance line up of products by developing new products; Strengthen partnership with corporate divisions
Investment trust companies
Increase the amount of investment trusts based on advanced asset administration services provided by MTBJ
Custody customers
Balance of approx. ¥60 trillion
• Expansion of the domestic and global custody business
• Insourcing of securities administration from financial institutions
Consulting, etc.
Consulting for pension structure and portfolio management Wealth management services
*Of the asset management and administration of securities, pension fund management and administration is classified as “Pension fund customers”, Investment trust management and administration is classified as “Investment trust customers”, while other management and administration such as Securities investment trust (e.g. Independently operated designated money trusts) is classified as “Securities customers”
22
Effective Use of Resources
Realize groupwide rationalization benefits of approx. ¥200-250 bn per annum through consolidation of domestic and overseas branch network
Raising efficiency in personnel usage, operations and systems
1. Review domestic and overseas branches network and introduce new channel strategy
Integrate overlapping branches in Japan and overseasto raise efficiency
New channel strategy to improve customer convenience
2. Effective use of human resources
Reduce/reallocate groupwide staff by approx. 10,000 by streamlining headquarters and back offices
Allocate resources into key strategic areas such as retail / SME businesses /Investment banking / Asset management
3. Enhance efficiency in operations and systems
Reduce system invest and operational costs through management integration
Create common platform for system and operation
Aim to realize rationalization benefits of approx. ¥200-250 billion per annum
Improve customer satisfaction by effective use of resources
Maximize Shareholder value
23
Review Domestic and Overseas Branch Network and New Channel Strategy
Respond to the diverse needs of customers, and organize a highly convenient network of branches, ATMs and direct channels which can be accessed “whenever” and “wherever”
Network of new group(End of Sept 04)
Enhance direct channels by utilizing IT
Throughout 24 hours
In general, overlapping locations are planned to be merged of the integration date
Overseas
Over 40 countries 408 locations
( Including 301 locations of UBOC)
Throughout world
Asia·Oceania:55 locations
Europe·Middle East, etc.:26 locations
Americas:26 locations
UBOC:301 locations
UBOC
(301 locations)
Currently studying whether to merge or abolish the overlapping locations (mostly in the metropolitan area, approx. 200 retail/90 corporate)
Domestic
Convenience store ATM Approx.16,000 locations
Non-branch ATM Approx.2,100 locations
Further develop Convenience store ATM
Central Japan
Retail:170 branches
Corporate:75 locations
East Japan
Retail:475 branches
Corporate:185 locations
Develop branches focused on consulting or Plus-type branches
West Japan
Retail:267 branches
Corporate:123 locations
Including Tokyo Metropolitan
Retail:450 Branches
Corporte:170 locations
Further develop UFJ24
Establish outlets focused on handling transactions for large corporations
Develop outlets focused on mid to small-sized companies in areas where there is currently no presence
The number of overseas branches are the sum of banks, trust banks and UBOC
Number of domestic branches are the sum of banks, trust banks and securities companies
24
New Group - Management Structure
Introduce “integrated business group system” to the new group in order to smoothly promote integrated group strategy (Flexible financial services with regional characteristics taken into consideration)
Establish strong internal control system such as CSA (Control Self Assessment) based upon COSO framework, which is appropriate for global top 5 financial institution
Full compliance with the U.S. Sarbanes-Oxley Act and risk management system as a NYSE listed company
Integrated business group system
New bank
New trust bank
New securities company
Retail
Corporate
Close cooperation
Trust assets
Corporate staff
Corporate Planning
Financial Planning
Accounting
Corporate Communications/IR
General affairs/Secretariat
Corporate Risk Management
Risk management framework
Credit risk
Market risk
Operational risk
Information security
Compliance
Compliance framework
Internal audit framework
Assess effectiveness of internal control
Implementation of a strong internal control system in compliance with COSO framework (Establish strong internal control system such as CSA )
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Business Management Platform of New Group (BSC/ISO) 1
For purposes of adequately promoting a group-wide strategy, implementing internal controls for the world’s largest comprehensive financial group based on assets, and improving customer service, the new group will enhance its management controls to a higher level, and introduce a business management platform (BSC/ISO) that can be commonly used by all companies in the group
Introduction of BSC (Balanced Score Card)
Establish balanced management goals
Reinforce the strategy to all group employees, and promote an understanding of the strategy
Clearly define the roles of organizations and individuals, and conduct fair and equal evaluations linked to the roles
Continuously improve performance through the PDCA cycle
Adopt advanced business management controls suitable for a global top 5 company
synergy effect
Introduction of management improvement measures that utilize ISO, etc.
Continuously improve quality of service toward the customer (customer focus), and promote the improvement of operations
Implement best practices based on the PDCA cycle, and promote organizational learning
Conduct objective evaluations and verifications by obtaining and maintaining ISO certification
Maintain and improve service quality as the organization expands
Business management platform that will steadily enhance customer satisfaction and shareholder value
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Business Management Platform of New Group (BSC/ISO) 2
Reflect ISO improvement processes and feedback from customers to concrete BSC Strategic measures
BSC=Business management based on corporate strategy (Business management based on strategic map and success indicators)
Plan:
Formulate and communicate strategic goals
Do:
Execute strategy and confirm results
Action:
Pursue/Revise strategy
Check:
Verify indicators of success and appropriateness of strategy
ISO=Improve management quality from the customers viewpoint
PDCA cycle originates from customers and sales force
Customer feedback
Monitor achievement of a number of BSC success indicators to further enhance management quality and effectiveness
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New group — Shared Personnel Platform
Create a common personnel platform to implement integrated business strategy
Establish brand new corporate culture for the new group through harmonization of former two groups’ corporate culture
1. Personnel Structure with the emphasis on achievement and professionalism
2. Infrastructure of intra-group personnel exchanges
Reform personnel appraisal and evaluation infrastructure of each group company
Shared personnel platform
3. Sharing of group’s targets and links between individual performance evaluation
Use BSC to share group strategic targets and link to appraisal of each individuals performance
4. Personnel training and evaluation in line with group’s corporate philosophy
Foster a new corporate culture by reflecting group corporate philosophy in personnel training and appraisal
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Summary
Highlights
Entering into a “New Phase” in financial business and management approach
Solidifying strong customer base
(Retail: 40 million customers; total deposits 66 trillion yen Corporate: 280 thousand customers; total lending 87 trillion yen)
Building a “New Business Model”
Raising efficiency while maintaining and enhancing service to customers
Developing an innovative, top quality “New Management Structure”
Aiming to raise customer satisfaction and maximize shareholder value
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Appendix
Reference: Status of Key Retail Products and Services 1
Key retail products and services (End of March 2004) ¥ 100 million
New group SMBC Mizuho FG
MTFG UFJ
Balance of loans to individuals 83,454 109,599 1 193,053 138,759 123,356
Year on year growth 6,003 7,132 1 13,135 2,100 (5,131)
Retail deposits 334,023 267,543 1 601,566 316,318 304,653
Year on year growth 12,379 1,719 1 14,098 4,216 (1,637)
Retail foreign currency deposits 9,441 5,375 1 14,816 5,713 N.A
Cumulative sales of investment annuities 3,609 2,540 1 6,149 4,829 N.A
Balance of investment trusts 13,872 10,163 1 24,035 20,057 12,145
Year on year growth 4,917 1,744 1 6,661 3,308 3,135
Note: Figures are the sum of the 2 banks of MTFG and UFJ on a non-consolidated basis (excluding securities companies). Figures for other companies are derived from each companies’ disclosed materials such as Disclosure Report and IR materials.
Investment trust balances are sourced from Kinyuuzaiseijijo magazine.
Figures with circle means ranking among Japanese financial institutions as of the end of March 2004
Testamentary trusts/Real estate commissions (End of March 2004 and FY2003) (No./ ¥ 100 million)
New group Sumitomo Trust Mizuho Trust
MTBC UFJ Trust
Number of testamentary trusts (with execution) 8,626 5,423 1 14,049 1,953 4,877
Real estate commissions 220 145 364 N.A N.A
Note: Real estate commissions are on a management accounts basis. Including housing sales subsidiaries. Figures for other companies are sourced from the Nikkei Financial Daily.
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Reference: Status of Key Products and Services 2
Corporate customers after integration (image) (End of August 2004) (Unit: 1,000 companies)
BTM+UFJ Sumitomo Mitsui Mizuho
Revenue
Number % of total Number % of total Number % of total
¥ 100 bn + 1.3 0.5% 1.1 0.5% 1.3 0.6%
¥10 bn - ¥100 bn 9.7 3.4% 7.8 3.5% 9.0 4.4%
¥3 bn - ¥10 bn 18.5 6.5% 14.2 6.4% 15.8 7.7%
Up to ¥3 bn 255.3 89.7% 199.8 89.7% 177.8 87.2%
Total 284.8 100.0% 222.9 100.0% 203.8 100.0%
Publicly listed companies 3.1 1.1% 2.5 1.1% 3.0 1.5%
Note: Based on data from Teikoku Data Bank Cosmos II
Comparison of loan balances on a consolidated basis/mid to small-sized business loan balances (End of September 2004) (Unit: Trillion yen)
MTFG+UFJ SMFG Mizuho FG
Loan balance on a consolidated basis 87.1 55.4 64.2
Mid to small-sized business loan balances * 26.8 20.9 25.4
Mid to small-sized loan balances are based on IR presentation materials for each company, and is the sum of bank accounts and trust accounts, excluding consumer loan balances. MTFG refers to Bank of Tokyo-Mitsubishi + Mitsubishi Trust Bank, UFJ refers to UFJ Bank + UFJ Trust + certain subsidiary companies, SMFG refers solely to the Sumitomo Mitsui Bank on a non-consolidated basis, and Mizuho FG refers to Mizuho Bank + Mizuho Corporate Bank + Mizuho Trust + certain special subsidiaries established for rehabilitation purposes.
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Reference: Status of Key Products and Services 3
Pension Trusts, Securities Trusts, and other trust products
(Asset balances at end of March 2004) (¥100 million)
MTBC UFJ trust Total Rank
Pension trusts 78,187 47,822 126,008 No. 1
Specified money trusts for pension 71,140 20,199 91,339 No. 1
Independently operated designated money trusts 71,204 38,442 109,646 No. 1
Fund trusts 2,243 1,142 3,385 No. 1
Specified money trusts 40,903 18,733 59,636 No. 1
Investment trusts 95,273 125,821 221,094 No. 1
Note: Welfare pension fund and defined benefit pension fund in market value, others in book value
Source: Estimates from each trust bank.
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For U.S. Investors
Filings with the U.S. SEC
Mitsubishi Tokyo Financial Group, Inc. (“MTFG”) may file a registration statement on Form F-4 (“Form F-4”) with the U.S. SEC in connection with the proposed management integration of UFJ Holdings, Inc. (“UFJ”) with MTFG. The Form F-4 (if filed) will contain a prospectus and other documents. If a Form F-4 is filed and declared effective, UFJ plans to mail the prospectus contained in the Form F-4 to its U.S. shareholders prior to the shareholders meeting at which the proposed business combination will be voted upon. The Form F-4 (if filed) and prospectus will contain important information about MTFG, UFJ, management integration, and related matters. U.S. shareholders of UFJ are urged to read the Form F-4, the prospectus and the other documents that may be filed with the U.S. SEC in connection with the management integration carefully before they make any decision at the UFJ shareholders meeting with respect to the proposed business combination. The Form F-4 (if filed), the prospectus and all other documents filed with the U.S. SEC in connection with the management integration will be available when filed, free of charge, on the U.S. SEC’s web site at www.sec.gov. In addition, the prospectus and all other documents filed with the U.S. SEC in connection with the management integration will be made available to shareholders, free of charge, by calling, writing or e-mailing:
MTFG CONTACT:
Mr. Hirotsugu Hayashi
26F Marunouchi Bldg., 4-1 Marunouchi 2-chome, Chiyoda-ku
Tokyo 100-6326 Japan
81-3-3240-9059
Hirotsugu_Hayashi@mtfg.co.jp
UFJ CONTACT
Mr.Shiro Ikushima
1-1 Otemachi 1-chome, Chiyoda-ku Tokyo 100-8114
Japan
81-3-3212-5458
shiro_ikushima@ufj.co.jp
In addition to the Form F-4 (if filed), the prospectus and the other documents filed with the U.S. SEC in connection with the management integration, MTFG is obligated to file annual reports with, and submit other information to, the U.S. SEC. You may read and copy any reports and other information filed with, or submitted to, the U.S. SEC at the U.S. SEC’s public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the other public reference rooms in New York, New York and Chicago, Illinois. Please call the U.S. SEC at 1-800-SEC-0330 for further information on public reference rooms. Filings with the U.S. SEC also are available to the public from commercial document-retrieval services and at the web site maintained by the U.S. SEC at www.sec.gov.
Forward-Looking Statements
This communication contains forward-looking information and statements about MTFG, UFJ and their combined businesses after completion of the management integration. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although MTFG’s and UFJ’s management believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of UFJ securities are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of MTFG and UFJ, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the SEC and the local filings made by MTFG and UFJ, including those listed under “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” in the prospectus included in the registration statement on Form F-4 that MTFG may file with the U.S. SEC. Other than as required by applicable law, MTFG and UFJ do not undertake any obligation to update or revise any forward-looking information or statements.
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