A U.S. factory construction boom driven by tax credits in the Inflation Reduction Act (IRA) is helping Mitsubishi UFJ Financial Group (MUFG) to shore up its dominance in project finance, a senior executive at the top Japanese lender said. MUFG ranked No. 1 in U.S. project finance loans for 13 straight years, as it took advantage to bridge the gap created by the 2008 global financial crisis that forced U.S. and European rivals to cut risk-weighted assets on their balance sheets. The bank's experience through tough times and retained capabilities have put it in a strong position to benefit from a recent surge in project finance deals, Fumitaka Nakahama, the chief of MUFG's global corporate and investment banking, told Reuters.
September 13, 2023 at 12:06 p.m.By Makiko Yamazaki and Ritsuko Shimizu
MUFG ranked No. 1 in U.S. project finance loans for 13 straight years, as it took advantage to bridge the gap created by the 2008 global financial crisis that forced U.S. and European rivals to cut risk-weighted assets on their balance sheets. Tax credits in the IRA "have helped expand the scope of project finance beyond energy, power and infrastructure to new asset classes like batteries and data centres," he said. The new assets tend to yield high-margin financing deals, he added.
MUFG beefed up the business by hiring senior Citigroup banker Jon Lindenberg in 2009 and then lured many former members of his team. The 2011 acquisition of $5 billion project finance loans from the Royal Bank of Scotland boosted its global presence.Japan's top three banks have been dominant players in project finance loans globally over a decade, given their worldwide reach and vast asset size totalling more than $6 trillion.
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