Mitsubishi UFJ (MTU) Might Fail To Dodge Strict Supervision

Mitsubishi UFJ Financial Group’s (NYSE:MTU) efforts to replace supervision of New York state Department of Financial Servicesfor a less grinding one is being resisted by the regulator, per an article by Financial Times.

The regulator’s reputation is of a strict supervisor having imposed penalties of billions of dollars.

Mitsubishi UFJ’s appeal for supervision to Office of the Comptroller of the Currency has triggered a spat between the regulators as the Department of Financial Services (DFS) fears that other banks might follow Mitsubishi UFJ, particularly after President Trump’s success in easing the federal regulations.

The Japan-based bank had applied to swap some of its state licenses for a single federal license from the Office of the Comptroller of the Currency. Per the bank, this step would improve the effectiveness of regulatory compliance.

However, DFS is resisting this move as it feels that the conversion was done hastily without taking in note of full records of Mitsubishi UFJ’s compliance deficiencies.

Per the article, the bank was still operating under a consent order imposed by the DFS three years ago and that the necessary all-clear approval has not yet been given by the state regulator, which is required for the conversion.

In 2013 and 2014, Mitsubishi UFJ paid about $560 million in fine over its handling of transactions with countries subject to U.S. sanctions.

Recently, Credit Suisse (NYSE:CS) was fined around $135 million by the DFS for violating laws in foreign-exchange trading.

Shares of Mitsubishi have gained 6% year to date, underperforming the industry’s rally of 16.5%.

The stock currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the same space are Shinhan Financial Group (NYSE:SHG) , sporting a Zacks Rank #1 (Strong Buy), and The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shinhan Financial has witnessed an upward earnings estimate revision of 8.5% for 2017, over the last 30 days. Its share price has risen 12.4% in the past 12 months.

Bank of N.T. Butterfield & Son has witnessed an upward earnings estimate revision of 2.2% for 2017, over the last 30 days. Inthe past 12 months, its share price is up 26.1%.

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