Post 5 Years of Negative Interest Rates, MUFG Bank to Invest in Ride-Hailing Giant – Grab
Business, Finance, Markets

Post 5 Years of Negative Interest Rates, MUFG Bank to Invest in Ride-Hailing Giant – Grab 

Pertaining to drooping interest rates in Japan over the past five years, Japan’s Mitsubishi UFJ Financial Group (MUFG Bank) is eyeing growth in the South-East Asian markets. Sources have revealed the lender’s plans to invest nearly 80 billion yen ($727 million) in Singapore’s ride-hailing service provider, Grab.

With this partnership, the two firms will be able to offer new services like lending and insurance via smartphone apps. The deal is expected to be finalised soon, with MUFG Bank completing investments by midyear. Currently, SoftBank Group is the major shareholder of Grab. After the deal signing, MUFG Bank will be the biggest financial institution investing in the Singaporean firm.

The investment favour by MUFG Bank will be returned by Grab, helping the lender to develop a “super app”, which will ease daily services for customers. The app’s personal loans and insurance offerings will be overseen by MUFG Bank. Payment services is a major section of the ride-hailing giant’s services. In order to better manage financial products like loans, Grab will be helped by the Japanese banks.

As competition is rising in the field of digital banking in MUFG Bank’s home market, this partnership will help it get an upper edge. The artificial intelligence systems, data analysis, skills and attributes of Grab will further aid the bank.

Recent market analysis has shown that plunging global bond yields and the impact of coronavirus outbreak, have affected the functioning of Japanese banks. While the Sumitomo Mitsui Financial Group 8316.T has dropped 1.2 percent and the MUFG Bank 8306.T has dropped by 0.9 percent. Based on equities analysts, Sumitomo Mitsui Financial Group Inc. has the potential to record 0.97 EPS for the current fiscal year.

Government sources revealed yesterday that the financial watchdog of Japan – Financial Services Agency(FSA) is conducting an emergency survey on domestic financial institutions with business operations in China. The survey is focused on estimating how coronavirus could impact credit costs. 

The FSA has asked lenders to be flexible in responding to borrowers requests for additional loans or any modifications in borrowing conditions. These regulations can possibly impact the already falling revenue of MUFG Bank and other Japanese financial institutions. However, MUFG Bank’s strategy to consider growth in the South-east Asian market can ensure some relief.

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