THE BASIS POINT

Union Bank of CA, Top Jumbo Lender, Taken Over By Mitsubishi

Mitsubishi Financial, Japan’s largest bank, increased its bid today to take over the third of Union Bank of California that it doesn’t already own. It will buy the remaining shares for an estimated $73.50 per share, valuing the bank at $10.1 billion. It’s the biggest bank deal announced this year.

This is relevant for California consumers seeking jumbo loans because UBOC is a key player in this market. They are a well-priced A-paper lender who’s been making a market in jumbos all year because they didn’t get involved in subprime and are well capitalized because of their Mitsubishi relationship. The problem is that underwriting turn times for their loans seem glacial at 45-60 days. While much of the nation’s local home markets are struggling, competition in the San Francisco purchase market still requires purchase loans to close in 30-40 days. This deal has been brewing for much of the year, and the hope is that now it’s moving forward, they will staff accordingly for the demand and continue to dominate the market.