Associated Press, Yuri Kageyama, 4 January 2006
The debut of the world's biggest bank, Bank of Tokyo-Mitsubishi UFJ, was marred Wednesday by a minor system glitch that halted some online remittance services on the bank's first day of business.
The bank's launch completes the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc., the world's largest financial group by assets at around 190 trillion yen, or $1.6 trillion (U.S.), topping U.S.-based Citigroup Inc.'s $1.55 trillion, based on most recent company figures.
The Japanese financial giants merged Oct. 1 to become Mitsubishi UFJ Financial Group Inc., but the merger of the group's core banks had been pushed back as engineers rushed to integrate their computer systems and automated banking machines.
But troubles surfaced Wednesday after the new bank's software prevented the processing of about 10 Internet-based remittance payment orders, according to Yuichiro Moto, a spokesman for the newly merged bank.
The bank was investigating the exact cause of the glitch, Moto said. All other operations at the bank seemed to be going smoothly, he said.
A similar merger effort about two years ago by rival Mizuho proved a disaster when a spate of computer glitches caused its ABMs across the country to go off line, causing double-billings on credit card purchases and stalling bill payments, cash transfers and withdrawals.
At a tape-cutting ceremony earlier Wednesday at Tokyo headquarters, Bank of Tokyo-Mitsubishi UFJ president Nobuo Kuroyanagi said the new bank still needs to boost profitability and come up with attractive investment products if it hopes to keep abreast of global competition.
"I'm not sure we should be talking about our weaknesses on our first day of opening for business," he said after cutting a red ribbon with huge scissors with two other officials in the lobby. ``It's a fact that we are lacking in profitability."
But he said his bank hopes to control about 50 per cent market share for Japanese companies doing business in Asia.
The banks' computer systems are not totally unified yet although they are linked up, and it's still undecided when the complete integration will take place, Kuroyanagi said.
The new bank's birth is the latest development in a continuing realignment of this country's banking sector, which has in recent years been slowly recovering from massive bad loans that had piled up during a decade-long economic slowdown.
Some analysts are skeptical about whether size alone will help Japanese banks compete against the likes of Citigroup and HSBC Holdings PLC.
"Size is often accompanied with a lack of focus and a slowness that results in losing touch with what the customers really need," Fariborz Ghadar, director of the Center for Global Business Studies at Penn State, said in an e-mail.
Fitch Ratings said Wednesday it has upgraded the outlook for Bank of Tokyo-Mitsubishi UFJ to positive from stable, reflecting that the good assets and capitalization of the combined bank could lead to a rating upgrade.
The Bank of Tokyo-Mitsubishi UFJ is among the three big banks that now dominate retail banking in Japan, including Mizuho Bank, and Sumitomo Mitsui Banking Corp.
Mizuho's parent group, Mizuho Financial Group Inc., was established in 2000 from the integration of the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank, while Sumitomo is the core bank of Sumitomo Mitsui Financial Group Inc., created in 2001 through the merger of Sumitomo Bank and Sakura Bank.
Mitsubishi UFJ Financial Group posted strong earnings in November due to lower bad-loan writeoff costs, and expects to post a group net profit of 520 billion yen ($4.4 billion) for the fiscal year through March 31, 2006.
Other banks are also posting healthy results, the latest indication that Japan's financial sector is on the mend after years of losses.
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The debut of the world's biggest bank, Bank of Tokyo-Mitsubishi UFJ, was marred Wednesday by a minor system glitch that halted some online remittance services on the bank's first day of business.
The bank's launch completes the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc., the world's largest financial group by assets at around 190 trillion yen, or $1.6 trillion (U.S.), topping U.S.-based Citigroup Inc.'s $1.55 trillion, based on most recent company figures.
The Japanese financial giants merged Oct. 1 to become Mitsubishi UFJ Financial Group Inc., but the merger of the group's core banks had been pushed back as engineers rushed to integrate their computer systems and automated banking machines.
But troubles surfaced Wednesday after the new bank's software prevented the processing of about 10 Internet-based remittance payment orders, according to Yuichiro Moto, a spokesman for the newly merged bank.
The bank was investigating the exact cause of the glitch, Moto said. All other operations at the bank seemed to be going smoothly, he said.
A similar merger effort about two years ago by rival Mizuho proved a disaster when a spate of computer glitches caused its ABMs across the country to go off line, causing double-billings on credit card purchases and stalling bill payments, cash transfers and withdrawals.
At a tape-cutting ceremony earlier Wednesday at Tokyo headquarters, Bank of Tokyo-Mitsubishi UFJ president Nobuo Kuroyanagi said the new bank still needs to boost profitability and come up with attractive investment products if it hopes to keep abreast of global competition.
"I'm not sure we should be talking about our weaknesses on our first day of opening for business," he said after cutting a red ribbon with huge scissors with two other officials in the lobby. ``It's a fact that we are lacking in profitability."
But he said his bank hopes to control about 50 per cent market share for Japanese companies doing business in Asia.
The banks' computer systems are not totally unified yet although they are linked up, and it's still undecided when the complete integration will take place, Kuroyanagi said.
The new bank's birth is the latest development in a continuing realignment of this country's banking sector, which has in recent years been slowly recovering from massive bad loans that had piled up during a decade-long economic slowdown.
Some analysts are skeptical about whether size alone will help Japanese banks compete against the likes of Citigroup and HSBC Holdings PLC.
"Size is often accompanied with a lack of focus and a slowness that results in losing touch with what the customers really need," Fariborz Ghadar, director of the Center for Global Business Studies at Penn State, said in an e-mail.
Fitch Ratings said Wednesday it has upgraded the outlook for Bank of Tokyo-Mitsubishi UFJ to positive from stable, reflecting that the good assets and capitalization of the combined bank could lead to a rating upgrade.
The Bank of Tokyo-Mitsubishi UFJ is among the three big banks that now dominate retail banking in Japan, including Mizuho Bank, and Sumitomo Mitsui Banking Corp.
Mizuho's parent group, Mizuho Financial Group Inc., was established in 2000 from the integration of the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank, while Sumitomo is the core bank of Sumitomo Mitsui Financial Group Inc., created in 2001 through the merger of Sumitomo Bank and Sakura Bank.
Mitsubishi UFJ Financial Group posted strong earnings in November due to lower bad-loan writeoff costs, and expects to post a group net profit of 520 billion yen ($4.4 billion) for the fiscal year through March 31, 2006.
Other banks are also posting healthy results, the latest indication that Japan's financial sector is on the mend after years of losses.
