The Mitsubishi Bank, Ltd.

7-1, Marunouchi 2-chome
Chiyoda-ku
Tokyo 100
Japan
(03) 240-1111

Public Company
Incorporated: 1919
Employees: 14,300
Assets: ¥43.31 trillion (US$346.54 billion)
Stock Index: Tokyo Osaka Kyoto Sapporo

The Mitsubishi Bank is only one of many companies that originated as a division of the giant Mitsubishi trading conglomerate and were later incorporated as independent companies. Before World War II, the various Mitsubishi companies were allowed to operate in concert as a large vertical monopoly called a zaibatsu. Postwar industrial legislation, however, brought about the disintegration of the conglomerate and forced each Mitsubishi company, including the Mitsubishi Bank, to endure success or failure without support from its sister companies. Industrial deregulation eventually allowed the group to re-form, and many now regard the Mitsubishi Bank as the leader or primary coordinator of business among its former zaibatsu partners.

The Mitsubishi Bank has its origin in the exchange office of the Mitsubishi Shoji, which was the original Mitsubishi company and one of the largest maritime shipping and warehousing enterprises in Japan. The exchange office added foreign-currency transactions to its business in 1890, and five years later was reorganized into a full-service banking department. By 1917, as the Mitsubishi group continued to grow, it became necessary that it reorganize. Several divisions were spun off into independent companies, including the bank, which became independent in 1919. The following year, the Mitsubishi Bank opened offices in New York and London.

Business for the Mitsubishi group as a whole remained quite strong through the 1920s, largely because of a rapidly expanding economy. As the primary instrument for the group’s financial needs, the bank grew accordingly, and from 1919 to 1929 doubled its capitalization, to ¥100 million.

Japan’s tumultuous industrialization brought down many banks, even those connected with trading conglomerates. The Mitsubishi group, however, was the strongest group in Japan, and survived calamitites such as the Kanto Earthquake in 1923 and several serious recessions.

Mitsubishi was one of the most active Japanese interests on the Asian mainland, particularly in Manchuria. The bank opened an office at Dairen, Manchuria’s main port, in 1933. At this time, a group within the military was rising to power that advocated a neo-mercantilist Japanese domination of Asia. This led to war with China in 1937, and political isolation some years later. On the eve of World War II, Mitsubishi was forced to close its offices in both London and New York.

The war was at first a profitable venture for the Mitsubishi group, Japan’s largest arms manufacturer. But after the United States joined the war against Japan, the entire nation’s industrial organization had to be changed. In order to increase efficiency, the government ordered a massive centralization, which in 1943 resulted in the merger of the Mitsubishi Bank and the One Hundredth Bank. The following year, the bank opened another office in occupied Shanghai under a directive to assist Japanese commercial and miltary interests.

When the war ended in 1945, the Mitsubishi group had suffered devastating losses in virtually every area of its operation. This, coupled with the collapse of commerce and the currency, left the bank with little but its human capital. What remained of the organization was split into hundreds of smaller companies by the occupation authority. The Mitsubishi Bank, renamed Chiyoda Bank in 1948, was reorganized and its ranks were purged of war criminals.

The Chiyoda Bank, named for the Tokyo financial district in which it was headquartered, started over as a common city bank and was strictly forbidden to reestablish ties with the other former Mitsubishi companies. These regulations, however, were gradually relaxed over time until, in 1953, after reopening its offices in London and New York, the bank readopted the name Mitsubishi.

With the expertise of its remaining staff, the Mitsubishi Bank quickly re-established itself as a powerful trade coordinating entity and rebuilt its ties with the other Mitsubishi companies, particularly the four trading companies that had re-emerged in 1954. The bank doubled its capitalization to ¥5.5 trillion between 1953 and 1956, and again to ¥11 trillion in 1960. Indeed, the bank had grown so spectacularly that its managerial ranks soon failed to keep pace. In an effort to place more experienced workers in the field, in 1957 the bank established a training center.

During the 1960s, the Mitsubishi Bank opened offices in Los Angeles, Paris, and Seoul. As an institution increasingly involved in corporate finance, the bank followed its clients to both export and resource markets. It financed raw-material purchases, helped to build factories that turned out finished products, and participated in the distribution of those products worldwide. As such, the Mitsubishi Bank became an integral contributor to Japan’s export-led growth.

Still chartered as a city bank, Mitsubishi was prevented from engaging in certain foreign-exchange and long-term-financing activities. Individual banking, perhaps Japan’s most stable business, was a low priority for Mitsubishi; the bank simply found greater opportunities in corporate business. Much of that opportunity grew from the influence the bank wielded inside the board rooms of its clients.

During the 1970s, the bank established several more offices in Europe, the United States, and Asia. A subsidiary, the Mitsubishi Bank of California, was opened in 1972. Later in the decade, however, as Japan became a capital-surplus nation, the lending market began to dry up as more and more companies elected to conduct their own financing. By the late 1970s, deregulation had narrowed profits on lending even further.

Recognizing the importance of information management, the bank established an information office in 1972, long before such intelligence units were popular. Such an office provided it the expertise with which to establish an investment-banking operation. Also, Mitsubishi experimented in new areas of business, including leasing, asset management, and a number of other quasi-financial ventures.

A very conservative operation, Mitsubishi is a known risk a voider. As a result, it was only minimally exposed to Third World lending and the rescheduling problems that came with that crisis.

Kazuo Ibuki initiated a broad corporate reorganization shortly after he was named president of the Mitsubishi Bank in June, 1986. In an effort to make Mitsubishi a universal, or full-service, international bank, Ibuki divided the company into five groups: international, merchant, corporate, national banking, and capital markets. A number of young, somewhat less stodgy employees have been promoted to management positions, injecting new imagination and enthusiasm into the organization.

The bank also reorganized its New York-based trust and banking subsidiary, formerly affiliated with the Bank of California, which Mitsubishi purchased in 1984 because it held great promise for Mitsubishi’s entry into trust banking and securities.

Despite that development, the Mitsubishi Bank has yet to disprove its reputation as an unimaginative follower. But, especially in light of the changes occurring in the industry, this could be a positive quality. And even in a new, more competitive market, Mitsubishi will continue to benefit from its preferred position within the Mitsubishi group.

Principal Subsidiaries:

Mitsubishi Bank of California (U.S.A.); Mitsubishi Bank of Canada; Japan International Bank Ltd. (U.K.); Mitsubishi Bank (Europe) S.A. (Belgium); Banco Mitsubishi Brasileiro, S.A. (Brazil); Liu Chong King Bank Ltd. (Hong Kong); Diamond Futures (Singapore) Pte. Ltd. (Singapore); Sime Diamond Leasing (Malaysia) Sdn. Bhd.; The Bank of California, N.A. (U.S.A.); Mitsubishi Bank (Panama) S.A.; Mitsubishi Finance (Cayman) Ltd. (Cayman Islands); Mitsubishi Finance (Hong Kong) Ltd.; Mitsubishi Finance International Ltd. (U.K.); Mitsubishi Bank of Australia, Ltd.; Mitsubishi Bank Trust Company of New York (U.S.A); Mitsubishi Bank (Switzerland) Ltd.; Siam Diamond Leasing (Singapore) Pte. Ltd.