TOKYO (AFP) - Japan's Sumitomo Trust and Banking Co. plans to file a damages suit worth 913 million dollars against UFJ Holdings over its abrupt switch of merger partners, news reports said.
As a first step, Sumitomo Trust is considering filing a lawsuit with the Tokyo District Court in November, seeking a court order to halt merger talks between UFJ Holdings and Mitsubishi Tokyo Financial Group Inc., news reports said.
Mitsubishi Tokyo, Japan's second-largest bank, and UFJ, the fourth largest, announced in mid-July plans to merge all of their operations but UFJ had previously agreed in principle to combine its trust bank unit with Sumitomo Trust.
The Supreme Court in late August rejected Sumitomo Trust's request for a provisional injunction against the UFJ-Mitsubishi Tokyo merger talks, saying Sumitomo Trust will not "suffer from considerable damage" in the case.
But the court also acknowledged Sumitomo Trust's exclusive negotiating rights to bid for UFJ's trust arm.
If Sumitomo Trust fails to win a court order in its planned appeal to halt negotiations between UFJ and Mitsubishi Tokyo, it would then file a civil suit, seeking 100 billion yen (913 million dollars), Kyodo News said, quoting company sources.
Ahead of the supreme court decision, UFJ Holdings and Mitsubishi Tokyo officially signed a basic agreement to merge to create the world's largest bank by October 1, 2005 with total assets of 190 trillion yen.
Mitsubishi Tokyo, the most profitable bank among the big four banking groups in Japan, has promised to provide up to 700 billion yen to boost UFJ's capital to help its smaller rival clean up bad loans.
Mitsubishi Tokyo's strength is its institutional banking, especially in Tokyo and its hinterland, while UFJ Holdings is strong in retail banking nationwide and would expand Mitsubishi Tokyo Financial's customer base.
Sumitomo Mitsui Financial Group Inc., which has made a rival bid for a merger with UFJ Holdings, is cooperating with Sumitomo Trust in an effort to stop the UFJ-Mitsubishi Tokyo merger negotiations, news reports said.
Sumitomo Mitsui Financial Group, Japan's third-largest lender, said late August that it had no plan to resort to a hostile takeover bid for UFJ Holdings.