Bank of Tokyo-Mitsubishi Ltd. on Thursday said it plans to change the ownership structure of its California banking affiliate.

The Japanese parent said Thursday that it would eliminate its direct stake in Union Bank of California, converting it into a slight increase in its controlling share of the U.S. bank holding company, Unionbancal Corp.

The move will clear up some confusion in the way the San Francisco-based banking unit reports earnings, Bank of Tokyo-Mitsubishi said.

The Japanese megabank says it plans to drop its 6% interest in Union Bank on Aug. 10 and raise its ownership of Unionbancal to 81.6% from 80.5%. The $30.9 billion-asset Unionbancal would become 100% owner of the Union Bank subsidiary.

Some market watchers thought the ownership adjustment might feed the speculation-heightened by the recent Asian economic problems-that Union Bank would go on the selling block.

"For a long time we've seen that Asian banks have very much needed capital to put into other operations," said James R. Bradshaw, an analyst with Pacific Crest Securities of Portland, Ore. "This move makes it simpler for the Japanese bank to divest its position in California."

But Union Bank officials denied that the move indicated any interest in selling out. Rather, they said the change was designed to promote a more accurate valuation of Unionbancal's stock, 19.5% of which is now publicly traded.

Because of the convoluted ownership structure, a residual effect of Union Bank's 1996 merger with Bank of California, 6% of Unionbancal's net income must be paid to the Japanese parent. This distorts the reported earnings per share, said John A. Rice Jr., Union Bank's vice president and manager of investor relations.

In a press release, Unionbancal president and chief executive officer Takahiro Moriguchi said, "We are simplifying the ownership structure of (the holding company), making it easier for shareholders and others to analyze its financial position and performance. In addition, the new ownership structure will provide greater flexibility, particularly with respect to potential transactions between" the California bank and its holding company.

"The 6% ownership was an organizational nuisance, and the change we are undertaking to clear that up is as innocent as it appears," Mr. Rice said. "I cannot understand how anybody would say this would facilitate the sale of Union Bank."

"This is more of a mechanical thing than anything else," said Thomas F. Theurkauf, an analyst with Keefe, Bruyette & Woods Inc. in New York. "It just simplifies the ownership structure."

Regardless of its Japanese parent's intentions, Union Bank would be an attractive doorway into the California market, observers agreed. It is the third-largest bank in the state, with 241 branches and significant presences in desirable areas like San Diego County, where its market share is about 18%.

"Union Bank is a marquee California franchise, of which there are very few remaining," Mr. Bradshaw said. "Just about all the acquisitive names we've been hearing about would be interested in something like this."

"It is a large property that would be an attractive entry vehicle for an out-of-state bank, particularly now that BankAmerica and Wells Fargo have partnered up with NationsBank and Norwest," said Joseph K. Morford, an analyst with Van Kasper & Co., San Francisco.

Both analysts said First Union Corp. and U.S. Bancorp might be interested if Union Bank became available.

Unionbancal said its board approved the transaction July 22 and had a fairness opinion rendered by Lehman Brothers Inc. It said the share exchange would be accounted for as a reorganization of entities under common control, which is similar to a pooling of interests, and would have no material effect on operations and results.

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