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Finance

MUFG takes $3.3bn loss on Southeast Asian bank write-downs

Stock crash sinks value of Indonesian, Thai and Philippine stakes

Stock market turmoil caused by the coronavirus pandemic is set to weigh heavily on MUFG's earnings.   © Reuters

TOKYO -- Mitsubishi UFJ Financial Group is set to book about 360 billion yen ($3.34 billion) in losses in the just-ended fiscal year on stakes in Southeast Asian banks after the coronavirus pandemic battered stock markets.

Japan's biggest banking group announced Tuesday a 212.8 billion yen impairment loss on its investment in Indonesia's Bank Danamon, which MUFG turned into a subsidiary in April 2019.

The bank recorded a similarly sized write-down for the first nine months of fiscal 2019 after the market value of its 94% stake dropped below half the purchase price. Bank Danamon shares failed to recover to a safe level by the end of the fiscal year on Tuesday, cementing the loss.

MUFG also reported a 130.5 billion yen write-down on its 77% interest in Thailand's Bank of Ayudhya, which it acquired in 2013.

The 360 billion yen figure includes a roughly 20 billion yen loss on a stake of about 20% in Philippines-based Security Bank purchased in 2016.

Although the Southeast Asian banks' earnings remain healthy, Japanese accounting rules require companies to reassess goodwill on acquisitions when their market value drops below half the price paid. The coronavirus-driven bear market is likely to force many such revaluations as companies close their books for the fiscal year ending Tuesday.

These losses will not change MUFG's dividend and share buyback plans.

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