JIN-284 -- UFJ Faces Revolt Over Merger Veto

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T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business, Technology and Cultural News
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Issue No. 284
Thursday, August 5, 2004
TOKYO

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CONTENTS

@@ VIEWPOINT: UFJ Faces Revolt Over Merger Veto

>> NEWS: Fischer in Asylum Dilemma

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@@ VIEWPOINT: UFJ Faces Revolt Over Merger Veto

UFJ, the struggling Japanese bank, is facing a shareholder revolt over
its out-of-hand rejection of a merger proposal from Sumitomo Mitsui
Financial Group (SMFG).

Anger is highest among UFJ's non-Japanese investors, who hold just over
31 percent of the shares. Fund managers told us that they intend to
"besiege" UFJ management with demands that it at least consider the
merger proposal.

The move by investors follows a decision by the Tokyo District Court on
Tuesday night prolonging by several weeks the freeze on merger talks
between UFJ and Mitsubishi Tokyo Financial Group (MTFG). That deal,
in its original form, would create the world's biggest bank by assets,
surpassing Citigroup. But the deal was forced off the rails when Sumitomo
Trust, which had previously agreed to buy UFJ's trust banking arm,
obtained an injunction.

UFJ and MTFG had hoped to complete their merger by September 2005. UFJ
has appealed to the Tokyo High Court, although the outcome may not be
known for up to two weeks. It is possible that SMFG might engineer a
hostile bid for UFJ.

A move on such a scale would be unprecedented in Japan.

Expressing his frustration, one fund manager told us: "It is
completely wrong of UFJ to throw out the idea of even talking to SMFG.
The UFJ president wouldn't even pick up the phone to his opposite number
at Sumitomo. How is that acting in the interests of shareholders?"

Analysts say merging with MTFG would help UFJ resolve billions of
dollars of bad loans left over from the collapse of assets in the early
90s. The loans have plagued UFJ since it was formed from a merger of
Tokai Bank, Sanwa Bank and Toyo Trust and Banking three years ago.

-- The Editors

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>> NEWS: Fischer in Asylum Dilemma

Bobby Fischer, the reclusive American chess player imprisoned at Tokyo's
Narita airport, appealed earlier this week to the Japanese Minister of
Justice in an attempt to avoid deportation to the United States.

His appeal process is expected to stretch his incarceration in the
airport detention cells by at least two weeks.

However, Fischer's plan to claim German citizenship might land the
grandmaster in trouble with Berlin if he is deported there rather than
America. His father was German, and his supporters say that all the
appropriate documents proving this are being flown to Japan.

But Fischer's outspoken anti-Semitism includes instances of Holocaust
denial -- a crime that carries a heavy prison sentence under German law.

Fischer's Web site, which now opens with an urgent request for political
asylum in a "friendly third country," declares his wish never to return
to "Jew-controlled USA." Further down the site, he says: "The so-called
Holocaust of the Jews ... is a complete hoax."

The former world champion, who has been detained since mid-July for
allegedly travelling on an invalid American passport, has been advised
by his lawyers to seek political asylum in Japan while they appeal
against his detention.

Japan accepts only political refugees. Fischer's supporters in Japan
say that he is being persecuted by American authorities. The basis of
Fischer's appeal is that he was never properly informed by the US
Government that his passport had been rendered invalid.

-- The Editors

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EDITORS
Written and edited by Roland Kelts and
Leo Lewis (editors@japaninc.com)

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