Japan's biggest bank may slash 10,000 jobs

MUFG, set up in 2005 from a merger, employs about 147,000 people worldwide. Its main lending unit had 766 branches in Japan and 75 abroad as of March 2015, according to its website.
MUFG, set up in 2005 from a merger, employs about 147,000 people worldwide. Its main lending unit had 766 branches in Japan and 75 abroad as of March 2015, according to its website. PHOTO: BLOOMBERG

Drastic cut comes as low interest rates, competition squeeze profit

TOKYO • Japan's biggest bank is set to undergo the most dramatic job cuts since it was formed after the nation's banking crisis shook the industry almost 20 years ago.

Mitsubishi UFJ Financial Group (MUFG) may shed about 10,000 posts - about 7 per cent of its workforce - over a decade as low interest rates and intensifying competition squeeze profit, people with knowledge of the matter said. That is more than double the 3,500 full-time roles that president Nobuyuki Hirano last year said MUFG would cut from its main banking unit through natural attrition and less hiring.

The move is a striking example of how Japanese banks are struggling with an increasingly challenging business environment as the central bank's negative-rate policy erodes margins and a shrinking population curtails credit demand. 

MUFG is seeking to reshape itself by closing branches and boosting technology investment - a strategy that peers at home and abroad are also pursuing.

MUFG stock rose 1.1 per cent at the close of trading in Tokyo yesterday. It is up less than 1 per cent this year, trailing the benchmark Topix Index's 5.1 per cent gain.

The drop in headcount could take place over a shorter period than the 10 years estimated. MUFG, set up in 2005 from a merger, employs about 147,000 people worldwide.

MUFG spokesman Taiki Kitaura declined to comment beyond saying it is considering various options such as reducing work volumes by making use of digital technology.

MUFG announced a "re-imagining" strategy last month, saying it would cut 120 billion yen (S$1.5 billion) of costs over several years through initiatives such as using financial technology to add digital banking channels and streamline back-office functions.

"As structural problems such as the decline in lending margins and the shrinking and ageing population emerge, we need to bring in new technologies as seen with fintech," Mr Hirano said on Thursday in his capacity as chairman of the Japanese Bankers Association.

MUFG is also seeking to boost gross profit by 180 billion yen through shifting thousands of corporate accounts to its banking unit from its trust banking arm in an effort to unify loan oversight.

MUFG's main lending unit had 766 branches in Japan and 75 abroad as of March 2015, according to its website. The bank's annual net income per full-time employee has fallen in each of the past four fiscal years, according to data compiled by Bloomberg. Still, the average over the past five years is US$104,136 (S$144,200), more than global peers JPMorgan Chase and HSBC Holdings.

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A version of this article appeared in the print edition of The Straits Times on June 17, 2017, with the headline 'Japan's biggest bank may slash 10,000 jobs'. Print Edition | Subscribe