SAN FRANCISCO - For years the question hanging over UnionBanCal has been whether and when its majority owner, Bank of Tokyo-Mitsubishi, would sell its stake in the California company.
But lately there are indications that it is drawing closer to UnionBanCal's flagship Union Bank of California.
The two banks have restarted educational exchanges and are jointly marketing such products as a dollar-denominated checking account offered by Union Bank in Japan. And in June, Union Bank started to train 15 Japanese-speaking bankers to work in retail operations. Some of them will specialize in selling to the employees of Tokyo-Mitsubishi's corporate clients in the United States.
"We've placed renewed emphasis on making sure we're the best brand" for Japanese corporations and consumers in this country, "and that's led to more cooperation with Bank of Tokyo-Mitsubishi," said Richard Hartnack, a vice chairman of the $43 billion-asset UnionBanCal, in an interview last week.
Such cross-Pacific coordination was a mark of the predecessor companies until the mid-1990s and indicates Tokyo's continued interest in Union Bank. Tokyo-Mitsubishi, now part of an even larger banking company, Mitsubishi-Tokyo Financial Group Inc., has been closely watched in the United States for signs that it would follow other Japanese banks in selling its stake in its U.S. affiliate.
The cooperation also highlights how UnionBanCal benefits from a relationship that has historically weighed on its shares. Some investors have regarded Tokyo-Mitsubishi's stake, which has ranged from 82% in 1998 to 63% currently, as a mark against UnionBanCal because it reduces trading volume in the publicly held stock. Moreover, the presence of one large investor has been viewed as undermining the board's independence and as allowing the company to grow certain business lines like syndicated loans too fast. Five of the 17 board seats are held by current or former executives of Bank of Tokyo-Mitsubishi.
"There is a lingering incorrect perception that Bank of Tokyo-Mitsubishi's controlling ownership is a negative for UnionBanCal," said Robert Lacoursiere, an analyst at Lehman Brothers. The disadvantage is "not nearly as meaningful as what the bank trades at - and in fact, there are positives," he said.
For Union Bank, the ties with Japan strengthen relationships with its original client base, Japanese corporations and immigrants in this country. Union Bank's competitors on the West Coast, which include some of the largest U.S. banks, are increasingly homing in on Asian communities as a source of new business.
Speaking to customers in their own language is one of Union Bank's strategies. At 4 p.m. Pacific standard time, three Japanese specialists start arriving at a Union Bank call center in the Orange County town of Brea. For the next 10 hours, call center employees speak Japanese with holders of the California Account, a U.S. dollar savings or checking account offered to Tokyo-Mitsubishi's Japanese customers.
Union Bank and Tokyo-Mitsubishi started discussing the product in 1999, and Tokyo-Mitsubishi started to advertise it in July of last year to high-net-worth customers. The print ads show archetypal California beach scenes and highlight the account's federal deposit insurance, the Tokyo-Mitsubishi/Union Bank relationship, and "a completely Japanese delivery system," says Jessica Anderson, Union Bank's director of marketing. By Aug. 31 there was $38 million in 2,500 California Accounts.
Citibank also offers a dollar-denominated account in Japan, and provides Japanese-speaking customer service personnel to assist account holders.
Then there is cross-border training. In August, three Tokyo-Mitsubishi executives graduated from a program designed show them up close how a U.S. bank works - from the teller window to the credit-scoring process. The next three are set to arrive in October.
Meanwhile, Union Bank has been trying to secure Japanese corporate and individual clients in the United States. Its predecessors got their start serving these communities, and it estimates it still has a relationship with 80% of the Japanese-owned companies operating in the United States.
That is one reason it started a Japanese version of its bank-at-work program, Company Benefits Checking. Launched in April, the program is geared toward the expatriate employees of Tokyo-Mitsubishi's Japanese clients and offers some culturally specific services, like explaining the very un-Japanese concept of checking accounts.
New Japanese immigrants, mostly skilled workers, have flocked to Union Bank, said Raymond Kozuma, its "Japanese segment" manager. It now has about 2,000 of these account holders, he estimated.
Such immigrants, many of whom will return to Japan but keep their U.S. accounts, contributed to the decision to hire the 15 Japanese specialists in June. They will work as account development officers out of the 23 branches that are part of the bank's "Japanese segment."
Other joint activities between the two companies are of the parent-owner type.
This month Union Bank announced it was buying back $300 million of its stock from Bank of Tokyo-Mitsubishi - as it did last year. The 2003 buyback is expected to add 5 cents to earnings per share this year and 14 cents next year. As result, UnionBanCal's stock rose 2.5%, while Bank of Tokyo-Mitsubishi's stake dropped from 65.0% to 63.3%.
But analysts say they do not read the buybacks as a signal that the Japanese company is considering cutting the ties.
