MUFG Takes Aim at Biggest Issuers

dunphy-kevin-headshot.jpg

MUFG Union Bank NA, the United States unit of Japan's biggest bank, plans to climb the ranks among U.S. municipal underwriters by focusing on the largest issuers.

"The clients that we're going after are large states, counties, cities, transit agencies, and utilities," managing director Kevin Dunphy said in an interview at the bank's New York office. "Those are the types of people that we're trying to help. We have a very high grade portfolio; it's all investment grade."

Smaller issuers who do not frequently come to market will be bypassed, he said.

"If it's an issuer that we're not familiar with that doesn't come to the market much that's not something we're after, because the other part of offering the credit is offering the complement of banking services with the non-credit fee services that we provide," Dunphy said. "And if you're coming to market every now and then with $18 million you're probably not going to benefit from our global empire."

MUFG said this month that the build-up of its muni team is a key element in its strategy to become a top-10 U.S. bank by assets. The bank currently holds the 13th spot, according to its own method of calculting its holdings. Dunphy said the bank is capable of edging its way to No. 11, "but to get inside 10 is going to be very difficult with organic growth."

"We're going to be spending the next five to 10 years improving our position in the states," he said.

Bank of Tokyo-Mitsubishi UFJ's US branch joined operations with Union Bank NA and renamed its holding company to MUFG Americas Holding Corp., earlier this month.

Since the financial crisis, the bank purchased commercial retail real estate resources from Deutsche Bank and invested $9 billion into Morgan Stanley. Beginning five-years ago, Dunphy was recruited to launch a public finance sector. Since then the company has added a health care group and a technology division within its corporate bank.

"We see an extraordinary investment in the Americas," Dunphy said. "We recognize that across the globe much of our future growth will come from this market. The initiation of the public finance effort was part of that recognition and part of a new customer service model."

MUFG built up its public finance team over the past year in its New York, Los Angeles and Dallas offices, creating a broader network to cover the country. The bank said it would like to continue to expand geographically if business dictates.

"We have 20 professionals dedicated to public finance," Dunphy said. "I don't think that anybody has a better team in this neck of the woods than we do. Certainly some of the big players are JPMorgan Chase and Bank of America, but we compare well against them now in terms of capability."

JPMorgan declined to comment. Bank of America didn't respond to a request for comments.

Among MUFG's most recent West Coast hires are muni vets Christopher Baron and Jay Goldstone, bringing over 40-years of public finance experience to the team as well as expertise in education, not-for profit, and financial statement analysis.

"When we do credits we do a lot of financial analysis, and [Goldstone] can tell me what's not in the financial statements or help me interpret things that have changed the statements," Dunphy said. "That's very important, because as much as we like to consider ourselves good analysts its different when you create the financial statements."

MUFG also believes that having three public finance professionals on the credit side that receive its credit applications can help boost its client services.

"Another advantage we have when you consider large foreign banks is that the credit division is [in New York]," Dunphy said. "Some people have to go back to home office, which can delay the process a little bit, but we're very concise. It's made a huge difference in our responsiveness."

The bank will utilize its newly formed team to expand its high-grade portfolio, which according to Dunphy is approaching the top 5 slot in terms of total exposure. He anticipates that MUFG will reach the top spot in the not too distant future.

"The growth that we've done - we've built very slowly as is our custom here," Dunphy said. "Now that we have the team that we want in place for the foreseeable future we can expand and become important to the clients."

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER