Magazine article American Banker

Sale Rumors Spark Surge in UnionBanCal's Volume

Magazine article American Banker

Sale Rumors Spark Surge in UnionBanCal's Volume

Article excerpt

Shares in UnionBanCal Corp. have risen almost 11% since the start of the month, and trading volumes have skyrocketed, with nearly 6.2 million shares changing hands on March 8 alone.

And while the company says the March 8 volume was probably the result of a tax play by an institutional investor, the high average daily volume so far this month, an increase of nearly 20% over last year's average, could be driven by reemerging rumors of a sale.

According to analysts, the feverish activity in the UnionBanCal's stock may be driven by rumors that Bank of Tokyo-Mitsubishi Ltd., which owns 67% of the stock, is looking to sell.

Similar rumors have fueled rises in the company's stock price in the past. However, this time some observers are giving the rumors credence. They point to the increasingly perilous financial situation of Japanese banking companies, including UFJ Holdings, which late last year quickly and quietly arranged a sale of its United California Bank to France's BNP Paribas and said goodbye to the U.S. market. That deal closed Friday.

"The thesis is that the Japanese regulator goes to the parent and says, 'You have to do something to raise capital,' and says, 'We'd recommend selling noncore holdings,' " said Brock Vandervliet, an analyst with Lehman Brothers.

More information on the financial health of Bank of Tokyo-Mitsubishi, a subsidiary of the giant Mitsubishi Tokyo Financial Group Inc., is expected in May, when it announces its fiscal yearend earnings. …

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