The Tokyo District Court has urged Mitsubishi UFJ Financial Group Inc. to pay about 5 billion yen in compensation to Sumitomo Trust & Banking Co. for their failed trust merger, but MUFG is likely to reject the court's proposal, sources familiar with the matter said Saturday.
The court proposed the settlement in recent mediation talks, but both sides are likely to reject the proposal and the case may have to be settled in court, the sources said.
Sumitomo Trust sued the UFJ group in fall 2004 after UFJ agreed that May to sell its trust unit to Sumitomo Trust before later calling off the deal.
The UFJ group then sought to merge with the Mitsubishi Tokyo Financial Group. The UFJ group and the Mitsubishi Tokyo group completed their merger on Oct. 1, becoming MUFG.
Sumitomo Trust and MUFG have been in court-sponsored mediation over the dispute since September.
The sources said Sumitomo Trust is seeking 100 billion yen in compensation, but MUFG believes it will not be able to gain shareholder approval to pay more than the estimated several hundred million yen spent by Sumitomo Trust in preparation for the failed merger.
It appears difficult to bridge the huge gap between the two sides by the next round of mediation slated for Oct. 19, the sources said.
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