TOKYO - Mitsubishi UFJ Financial Group became Japan's most valuable company for the first time on the Tokyo stock market on July 13, overtaking Toyota Motor as expectations grow that higher interest rates will lift bank earnings.
The group's market capitalization stood at about 42 trillion yen based on July 13 closing prices, exceeding Toyota's value by more than 1 trillion yen and placing it at the top among listed Japanese companies.
Buying in Mitsubishi UFJ shares has increased on expectations that the Bank of Japan's policy of raising interest rates will push up lending rates and expand profits at its banking unit, MUFG Bank.
Toyota had maintained the top position in market capitalization on the Tokyo market for 22 years until May, when SoftBank Group took the lead on the back of strong semiconductor demand. Kioxia Holdings also briefly overtook Toyota afterward.
A market participant said the rise of a megabank to the top of the rankings symbolizes Japan's entry into "a world with interest rates."
Mitsubishi UFJ Financial Group traces its origins to some of Japan's oldest banking houses, reflecting more than a century of industrial expansion, postwar reconstruction, financial deregulation and consolidation in the country's banking sector.
The group's deepest roots lie in Mitsubishi Bank, founded in 1919 as the banking arm of the Mitsubishi zaibatsu, one of Japan's major prewar industrial conglomerates. The bank supported the growth of Mitsubishi group companies in shipping, mining, heavy industry and trading, and later became one of the pillars of Japan's corporate finance system.
After World War II, the dissolution of the zaibatsu system reshaped Japan's major business groups, but Mitsubishi Bank remained a core institution in the postwar economy. As Japan entered its high-growth era, the bank helped finance manufacturers, exporters and infrastructure projects that drove the country's rapid industrialization.
Another major predecessor was Sanwa Bank, established in Osaka in 1933 through the merger of three regional banks. Sanwa became closely associated with the Kansai business community and grew into one of Japan's largest city banks. Tokai Bank, founded in Nagoya in 1941, developed strong ties with the Chubu region, including manufacturers centered around the automotive and machinery industries.
The modern group began taking shape during Japan's banking consolidation after the collapse of the asset bubble in the early 1990s. Mitsubishi Bank merged with Bank of Tokyo in 1996, creating Bank of Tokyo-Mitsubishi. Bank of Tokyo had long served as Japan's specialist foreign exchange bank, giving the combined institution a powerful international network.
On the other side of the merger history, Sanwa Bank and Tokai Bank combined with Toyo Trust and Banking in 2001 to form UFJ Holdings. The name UFJ stood for "United Financial of Japan." The new group was intended to create a stronger national banking force, but it soon faced heavy pressure from bad loans left over from the bubble economy.
The decisive step came in 2005, when Mitsubishi Tokyo Financial Group and UFJ Holdings merged to form Mitsubishi UFJ Financial Group. The deal created Japan's largest banking group and one of the world's biggest financial institutions by assets. In 2006, Bank of Tokyo-Mitsubishi and UFJ Bank were integrated as Bank of Tokyo-Mitsubishi UFJ.
The merger combined Mitsubishi's strength in large corporate banking and international finance with UFJ's retail and regional customer base. It also marked a turning point in Japan's banking sector, where years of bad-debt problems, regulatory pressure and weak profitability had pushed the major banks into a smaller number of giant financial groups.
Mitsubishi UFJ expanded its global reach in the years that followed. It invested in Morgan Stanley during the global financial crisis in 2008, a move that later became one of the most important overseas investments by a Japanese financial institution. The group also built businesses across Asia, the United States and Europe, while maintaining its position as a central lender to Japan's largest companies.
In 2018, the group's core bank shortened its English name to MUFG Bank, replacing Bank of Tokyo-Mitsubishi UFJ, while the holding company remained Mitsubishi UFJ Financial Group. The change reflected a push to create a simpler global brand under the MUFG name.
For much of the era after Japan's bubble collapse, megabanks operated under extremely low or negative interest rates, limiting the earnings power of traditional lending. Mitsubishi UFJ, like its peers, relied on scale, fee businesses, overseas operations and cost controls to sustain profits.
That environment has begun to change as Japan moves back toward a world with interest rates. Expectations of higher lending margins have lifted investor interest in megabanks, turning Mitsubishi UFJ from a symbol of post-bubble consolidation into a beneficiary of Japan's monetary policy shift. Its rise to the top of Japan's market capitalization rankings marks a sharp change in market leadership, from manufacturers and technology-linked companies toward financial institutions positioned to profit from higher rates.
Source: TBS
