SHANGHAI (Reuters) - Mitsubishi UFJ Financial Group (MUFG) (T:8306) is looking to co-operate with regional banks in China, as well as hire more risk and compliance staff, in a bid to navigate the country's tighter regulatory environment.
Beijing has launched a slew of new regulations this year to reduce leverage across the financial sector, from rules to rein in risky off-balance sheet bank lending to halting new licenses for micro-loan firms.
"We have to meet such requirements and we need more talented people," Eiichi Yoshikawa, a senior managing executive officer at Japan's largest bank by assets, told Reuters on Friday.
In order to "provide more diversified financial services" to meet the changing needs of customers, MUFG will "need partner banks in China", Yoshikawa added.
He did not give any details on prospective partners nor existing co-operation agreements.
MUFG's clients would previously make in China with the aim to export their products but now they are looking to sell more in the domestic market, he said, as soaring disposable income drives up demand in the country.
This means customers are increasingly looking for cash collection services, dealer finance, supply chain finance, all of which can be better provided through co-operation with regional banks, Yoshikawa added.
MUFG needs "talented, resourceful Chinese people" for risk management and compliance, Yoshikawa said, but added the bank would not increase its headcount in the country.
MUFG's current headcount in China is 2,400.
Faced with sluggish growth at home, due to lower returns from lending under the Bank of Japan's monetary easing, MUFG has been trying to expand its presence overseas.
In Southeast Asia, MUFG already holds stakes in Vietnam's Vientinbank, Thailand's Bank of Ayudhya (BK:BAY) and Security Bank Corp (PS:SECB) of the Philippines.
The Japanese lender's next plan is to invest in Bank Danamon Indonesia (JK:BDMN), sources have told Reuters.
While Yoshikawa did not confirm the news that MUFG was in talks to buy a 40 percent stake in Danamon for around $1.75 billion, he said MUFG was interested in investing in Indonesia.