Mitsubishi Tokyo Financial Grp & UFJ Holdings -- The Worldest Largest Bank, But Not For Long? (ADR: MTF)

Japanese Banks are Back: Mitsubishi Tokyo Financial Group (ADR: MTF) will take over UFJ Holdings on Saturday to become the world's largest bank. However, from 2007 the Japan Post will be on its way toward privatization if P.M. Koizumi has his way, and the Postal Savings division with nearly US $3 trillion in assets will dwarf the reported $1.68 trillion combined assets of Mitsubishi UFJ Financial Group, Inc. Citibank (ticker: C) currently owns the title of the world's largest bank and had $1.55 trillion in assets based on its latest financial reports.

Jesper Koll, chief economist at Merrill Lynch & Co., commented, "The banks are back" and "A normal economy where you've got not just growth in employment and wages, but also growth in credit is likely to become more pronounced." (AP)

Japanese banks have been cleaning up their act and their books since P.M. Koizumi took office in 2001. Bad loans on balance sheets peaked at $325.7 billion in March 2002. As of the end of this past March that amount had been reduced to $166.5 billion. (source: Japan Financial Services Agency)

An interesting note is that Japan's "Big Four" in banking -- Mizuho Financial Group, Mitsubishi Tokyo, Sumitomo Mitsui Financial Group and UFJ -- didn't even exist 15 years ago. All were formed in recent years through mergers with smaller banks. These banks have written-off and reduced non-performing loans now to half of the March 2002 peak. Financial Services Agency Minister Tatsuya Ito has called this a "turning point," in which the banks have met the government target for moving banks toward financial health. (AP)

Mitsubishi Tokyo Financial Group's U.S. traded ADR (ticker: MTF) is up over 14% since the start of the week leading up to their take over of UFJ Holdings this Saturday.

For more information click here to link to the following AP article.