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Companies

MUFG Bank to trim headquarters staff by half

3,000 employees will be relocated to overseas branches and sales divisions

MUFG Bank's headquarters in Tokyo's Marunouchi district. Roughly 6,000 staff currently work there. (Photo by Akira Kodaka)

TOKYO -- MUGF Bank, Japan's largest lender, will shrink the number of employees working at its Tokyo headquarters by half, Nikkei has learned.

The fifth largest bank in the world by assets has concluded that many of the functions performed by the 6,000 people working at the head office can be automated, and will reallocate around 3,000 of them to overseas branches and domestic sales divisions.

The reforms, scheduled to be implemented in phases within five years, come as Japanese banks struggle to grow profits amid low interest rates. The traditional business model of banks earnings margins between savings and lending is becoming increasingly difficult as long-term interest rates hover around zero.

MUFG's headquarters currently has large teams involved in corporate planning and administrative management. Simple paperwork will be shifted to Robotic Process Automation and be handled by software and artificial intelligence.

A large part of the trimmed headquarter staff will be relocated to sales divisions, which is expected to face a sharp drop in head count as employees that joined around the year 1990, amid Japan's "bubble economy" years, reach retirement age.

Many will also be sent to branches in the U.S. and Asia, where the bank is expanding its operations. At the headquarters, meanwhile, divisions developing new digital payment models and legal staff handling overseas regulatory issues will be increased.

As part of a broader reform package, MUFG has already begun to trim down the number of physical branches that cater to customers, and is also cutting down new hires by 45% to 530 people next spring.

The bank has high hopes for financial services technology in the future, but is saddled with a cost-ratio of 68%, which is high compared with rival financial institutions. As competition with startups intensify in the fintech sphere, the bank feels it needs a more lean cost structure to compete.

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