Enhanced business and capital alliance between MUFG Bank and JACCS

Norbert Gehrke

17 Mar 2025 — 4 min read

MUFG Bank and JACCS have been working together on group collaboration based on the alliance announced in 2008. Meanwhile, the business environment surrounding both companies has been changing rapidly, including changes in the financial environment and the advancement of digital transformation (DX). In response to these changes, while building upon the achievements of their collaboration to date, MUFG Bank and JACCS have signed a contract for a new capital and business alliance that expands on the content of the former alliance to strengthen and deepen their partnership.

As part of this Business and Capital Alliance, MUFG Bank will acquire 9,980,831 common shares of JACCS through a third-party allotment, representing 22.15% of JACCS's total issued shares. Combined with the 7,015,969 shares already owned, this will bring MUFG Bank's ownership to 37.72%. As a result of this Third-Party Allotment, the combined voting rights in JACCS held by MUFG Bank, Mitsubishi UFJ Financial Group, and other MUFG Group companies will represent 40.00% of JACCS's total voting rights. Additionally, to facilitate the smooth implementation of this Business and Capital Alliance, subject to approval at JACCS's shareholders' meeting, both companies have agreed that MUFG Bank will appoint two directors to JACCS's board.

1. Purpose and Rationale of the Business and Capital Alliance

MUFG has positioned "Strengthening the Domestic Retail Customer Base" as one of its growth strategies for the MUFG Group, aiming to maximize "LTV (Life Time Value) × Customer Base." To achieve this, MUFG is working on five strategic priorities:

expanding customer touchpoints,
effective promotion and incentives,
providing integrated customer experience (CX),
utilizing data and AI for optimal customer proposals, and
strengthening products and services, while further deepening integrated operations across major group companies.

JACCS will launch its 15th Medium-Term Management Plan, "Do next!" starting from the fiscal year ending March 2026, with the theme of "Three years of challenging 'transformation' and 'regrowth' through expanded collaboration with the MUFG Group." This plan emphasizes "Accelerating growth strategies through MUFG Group collaboration and M&A," aiming for further growth and expansion in housing-related products, environmental areas such as electric vehicles, guarantee services, and overseas business.

Under the former alliance, MUFG, MUFG Bank, and JACCS positioned JACCS as one of the core companies supporting the MUFG Group's consumer finance strategy. In March 2008, JACCS became an equity-method affiliate of MUFG Bank, and both companies have been working on group collaboration. As a result, the collaboration between JACCS and MUFG Bank in their joint business "Net DE Loan" has progressed steadily, with JACCS's guarantee balance for "Net DE Loan" exceeding 100 billion yen, demonstrating concrete results. Meanwhile, the business environment surrounding both companies has changed significantly, including the transition to a world with interest rates and the advancement of social and service DX. To respond to these environmental changes, both companies have agreed to enhance the former alliance and strengthen and deepen their partnership in terms of both capital and business, recognizing the need to accelerate their existing collaboration and more forcefully advance integrated group operations.

2. Details of the Business and Capital Alliance

2.1 Details of the Business Alliance

MUFG Bank and JACCS will further strengthen group collaboration by mutually providing and utilizing the customer base and financial solution capabilities of both companies and the MUFG Group.

Specifically, while furthering the growth of the "Net DE Loan" joint business that they have been working on, they will provide smooth funding to meet the purchasing needs of individual customers arising from JACCS's strong merchant network in the credit business, also utilizing the MUFG Group's stable funding capabilities. Additionally, they will accelerate integrated group operations by exploring the following collaborations:

Growth Strategy

Build a new framework for mutual customer referrals by maximizing the customer network of not only MUFG Bank but the entire MUFG Group
Explore new areas of collaboration, such as adding JACCS products to MUFG Bank's Banking as a Service (BaaS) and expanding BaaS to JACCS's affiliated merchants
Expand JACCS's investments and M&A utilizing the MUFG Group's digital financial network
Strengthen JACCS's overseas business operations and financial foundation, promote new market entry and new investments using the MUFG Group's global network

Efficiency and DX Promotion

Share various know-how, particularly digital expertise, from the MUFG Group to support JACCS's cost reduction and productivity improvement initiatives
Improve JACCS's operational efficiency through the introduction of AI-powered screening models and security measures on an MUFG Group basis

2.2 Details of the Capital Alliance

To actively promote this Business and Capital Alliance and enhance its effectiveness, MUFG Bank will acquire 9,980,831 common shares of JACCS through the Third-Party Allotment. Combined with the 7,015,969 shares already owned, this will bring MUFG Bank's ownership to 37.72%, for a total investment of 39,084,934,196 yen. The payment period for this Third-Party Allotment is set from April 1, 2025, to June 30, 2025. The payment will be made promptly upon completion of necessary procedures under international competition laws.

2.3 Appointment of Directors

MUFG Bank and JACCS have agreed in the Business and Capital Alliance Agreement that, to facilitate the smooth execution of the business alliance, two individuals nominated by MUFG Bank will be candidates for JACCS's board of directors. JACCS plans to propose the election of directors, including these two nominees from MUFG Bank, at its 94th Annual General Meeting of Shareholders scheduled for June 2025.

3. Future Outlook

The impact of this Business and Capital Alliance on the consolidated performance of MUFG and JACCS for the fiscal year ending March 2025 is expected to be minimal, but it is anticipated to contribute to the improvement of both companies' business performance over the medium to long term. If any matters requiring disclosure arise during the detailed discussions of the business alliance between the two companies, they will be promptly disclosed.

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