PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
FUKOKU SEIMEI BUILDING, 2-2 UCHISAIWAICHO 2-CHOME, CHIYODA-KU,
TOKYO 100-0011, JAPAN
TELEPHONE (813) 3597-8101 FACSIMILE (813) 3597-8120
September 7, 2006
VIA EDGAR
U.S. Securities and Exchange Commission
100 F Street, NE
Washington DC, 20549, U.S.A.
Attention: Ms. Cecilia D. Blye
Chief, Office of Global Security Risk
Mitsubishi UFJ Financial Group, Inc.
Form 20-F/A for Fiscal Year Ended March 31, 2005
------------------------------------------------
Dear Ms. Blye:
We are submitting this letter on behalf of our client,
Mitsubishi UFJ Financial Group, Inc. (the "Registrant") in response to your
letter, dated August 16, 2006, addressed to Mr. Nobuo Kuroyanagi, the
Registrant's President and Chief Executive Officer. We appreciate the Staff's
review of and comments to the Registrant's previous annual report on Form
20-F/A for the fiscal year ended March 31, 2005 (the "Form 20-F/A").
Set forth below are the comments of the Staff together with the
Registrant's responses to those comments.
COMMENT NO. 1. We note on your website that you have a
representative office in Iran. In addition, public media reports indicate that
you have loaned monies to Iranian financial institutions and other entities
affiliated with the Iranian government. Iran is identified as a state sponsor
of terrorism by the U.S. State Department, and is subject to U.S. economic
sanctions and export controls. Your Form 20-F contains no information
regarding your business activities related to, or contacts with Iran. Please
describe for us in reasonable detail the nature and extent of your past,
current, and anticipated business activities related to, or contacts with,
Iran, whether through subsidiaries, affiliates, joint ventures, or other
direct or indirect arrangements. Describe any business contacts with
individuals or entities affiliated with or controlled by the Iranian
government. Identify any state-owned entities that have received financing
form, or arranged by, you, and the uses made of the funds received.
U.S. Securities and Exchange Commission 2
RESPONSE TO COMMENT NO. 1. The Registrant has advised us that
its operations with entities in Iran are limited and consist primarily of
loans to Iranian financial institutions in the form of financing for petroleum
projects and trade financing for general commercial purposes, as well as
letters of credit and foreign exchange services. These loans and services were
provided by the Registrant's wholly owned subsidiary, The Bank of
Tokyo-Mitsubishi UFJ, Ltd. (including its predecessors, The Bank of
Tokyo-Mitsubishi, Ltd. and UFJ Bank Limited).
As of March 31, 2006, the total outstanding amount of such loans
made by the Registrant to entities in or affiliated with Iran and other
countries identified as state sponsors of terrorism (Cuba, North Korea, Sudan
and Syria) did not exceed $1,100 million, representing less than 0.1% of its
total assets as of March 31, 2006.(1)
The Registrant's wholly owned subsidiary Bank of
Tokyo-Mitsubishi UFJ also has a small representative office in Tehran, Iran
staffed by seven employees (one employee seconded from Japan and six local
employees as of March 31, 2006). This representative office's primary function
is to collect local economic and political information, facilitate
currency-exchange, deposit and other banking services with the Iranian central
bank and support economic relief efforts by the Japanese government.
The Registrant currently does not plan to increase significantly
the size or alter the nature of its operations in Iran.
COMMENT NO. 2. Please discuss the materiality of the business
activities or other contacts described in response to the foregoing comment,
and whether they constitute a material investment risk for your security
holders. You should address a materiality in quantitative terms, including the
dollar amounts of any associated revenues, assets, and liabilities. Please
also address materiality in terms of qualitative factors that a reasonable
investor would deem important in making an investment decision, including the
potential impact of corporate activities upon a company's reputation and share
value.
RESPONSE TO COMMENT NO. 2. The Registrant believes that its
lending operations with entities in Iran do not constitute a material
investment risk to its security holders. This conclusion is based on the
Registrant's evaluation of the quantitative figures presented in the response
to Comment No. 1 above, as well as qualitative factors such as the nature and
impact of those lending operations on its corporate reputation and share value
based on what a reasonable investor would likely consider material in making
an investment decision with respect to the Registrant's securities.
From a quantitative standpoint, the Registrant's lending
operations with entities in Iran comprise a very minor portion of its overall
lending business. As noted above, the total outstanding amount of such loans
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(1) Based on the Registrant's preliminary estimate of its total assets as of
March 31, 2006. The Registrant is currently finalizing its U.S. GAAP
financial statements for the fiscal year ended March 31, 2006, but does
not expect any substantial deviation from the estimate.
U.S. Securities and Exchange Commission 3
made by the Registrant to entities in Iran represented less than 0.1% of its
total assets as of March 31, 2006. Accordingly, the Registrant considers its
operations in Iran to be quantitatively immaterial to its business, financial
condition and results of operations.
The Registrant further believes that qualitative factors do not
render its operations with entities in Iran material. In reaching this
conclusion, the Registrant has considered the nature of its operations with
entities in Iran, as well as the potential reputational impact and potential
impact on the value of its publicly traded shares of dealing with countries
such as Iran in assessing whether and how such transactions should be
disclosed in its filings with the Staff. The Registrant's lending operations
with entities in Iran comprise an immaterial portion of its overall lending
business, and to the best of its knowledge the funds provided to borrowers in
Iran have been used primarily for financing of petroleum projects and general
commercial trade. Accordingly, the Registrant does not believe that a
reasonable investor would consider its lending operations with entities in
Iran material when making an investment decision.
For the reasons described above, the Registrant does not
believe that its past and current operations with entities in Iran should be
considered a material investment risk to investors. Nevertheless, to enhance
its ongoing disclosure of potential risks the Registrant proposes to include
additional risk factor disclosure in its annual report on Form 20-F for the
fiscal year ended March 31, 2006 substantially in the form set out in Annex A
hereto. The Registrant will also carefully monitor its operations in Iran and
any other country identified as a state sponsor of terrorism, and include in
future Exchange Act filings any appropriate disclosure concerning those
activities and the risks of doing business in those countries.
* * *
In connection with responding to the comments of the Staff, the
Registrant acknowledges that:
o the Registrant is responsible for the adequacy and
accuracy of the disclosure in the filings;
o staff comments or changes to disclosure in response to
staff comments do not foreclose the Commission from
taking any action with respect to the filings; and
o the Registrant may not assert staff comments as a
defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the
United States.
U.S. Securities and Exchange Commission 4
Please contact the undersigned at +81-3-3597-8101 (fax number
+81-3-3597-8120) if we may be of help in answering any questions that may
arise in connection with your review of this letter.
Sincerely,
/s/ Tong Yu
--------------------------
Tong Yu
cc: Donald A. Walker
Pradip Bhaumik
U.S. SECURITIES AND EXCHANGE COMMISSION
Mitsubishi UFJ Financial Group, Inc.
U.S. Securities and Exchange Commission 5
ANNEX A
TRANSACTIONS WITH COUNTERPARTIES IN COUNTRIES DESIGNATED BY THE
U.S. STATE DEPARTMENT AS STATE SPONSORS OF TERRORISM MAY LEAD SOME POTENTIAL
CUSTOMERS AND INVESTORS IN THE U.S. AND OTHER COUNTRIES TO AVOID DOING
BUSINESS WITH US OR INVESTING IN OUR SHARES.
We, through our banking subsidiary, engage in limited operations
with entities in or affiliated with Iran and Cuba, including transactions with
entities owned or controlled by the Iranian or Cuban governments, and the
banking subsidiary has a representative office in Iran. The U.S. State
Department has designated Iran and Cuba as "state sponsors of terrorism," and
U.S. law generally prohibits U.S. persons from doing business with such
countries. Our activities with counterparties in or affiliated with Iran, Cuba
and other countries designated as "state sponsors of terrorism" are designed
to ensure compliance with both applicable Japanese and U.S. regulations.
Our operations with entities in Iran consist primarily of loans
to Iranian financial institutions in the form of financing for petroleum
projects and trade financing for general commercial purposes, as well as
letters of credit and foreign exchange services. In addition, we extend trade
financing for general commercial purposes to a corporate entity affiliated
with Cuba. We do not believe our operations relating to Iran and Cuba are
material to our business, financial condition and results of operations, as
the loans outstanding to borrowers in or affiliated with Iran and Cuba
represented less than 0.1% of our total assets as of March 31, 2006.
We are aware of initiatives by U.S. governmental entities and
U.S. institutions such as pension funds, to adopt or consider adopting laws,
regulations or policies prohibiting transactions with or investment in, or
requiring divestment from, entities doing business with Iran and other
countries identified as state sponsors of terrorism. It is possible that such
initiatives may result in our being unable to gain or retain entities subject
to such prohibitions as customers or as investors in our shares. In addition,
depending on socio-political developments our reputation may suffer due to our
association with these countries. The above circumstances could have a
significant adverse effect on our business or the price of our shares.