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SAN FRANCISCO — UnionBanCal Corp. said Friday it will receive a $2 billion capital infusion from its parent company, The Bank of Tokyo-Mitsubishi UFJ Ltd., by Sept. 30.
The money will help UnionBanCal offset potential future credit losses if economic conditions result in a worst-case scenario, said CEO Masaaki Tanaka.
"The highly adverse scenario is significantly more pessimistic than that which is incorporated into our base financial forecast, and was based on the Federal Reserve's publicly available Supervisory Capital Assessment Program assumptions," Tanaka said.
If the credit costs do not deteriorate to that extent, the cash will be considered excess capital that could be used for organic growth and acquisitions.
He said the cash infusion is voluntary and pre-emptive, made at UnionBaCal's request to ensure it is viewed as a strong financial institution.
The move will boost UnionBanCal's capital ratios, which the company said already exceeds most regional bank competitors.
On a pro forma basis, the $2 billion would boost tangible common equity 43 percent to $6.7 billion, the tangible common equity ratio would increase by 2.55 percentage points, to 9.11 percent, and the Tier 1 common ratio would increase by 3.21 percentage points, to 11.87 percent, as of June 30.
