Mitsubishi UFJ's talks for stake in HDFC Bank said to hit snag

Mitsubishi UFJ Financial Group Inc.’s negotiations for a minority stake in HDFC Bank Ltd.’s consumer lending unit are stalling due to differences over how much say it will have in company strategy, according to people familiar with the matter.

While MUFG is still interested in HDB Financial Services Ltd., the talks may face further delays or even fall apart, the people said, asking not to be identified because the matter is private. HDFC could consider an initial public offering of the consumer lending unit as an alternative, one of the people said.

No final decisions have been made and negotiations could get back on track if the Japanese lender is offered a significant say in HDBF’s business strategy, according to the people.

A representative for MUFG declined to comment. HDFC Bank didn’t immediately respond to a request seeking comment.

MUFG has been seeking to build its presence in India, where HDBF offers services such as personal, gold and auto loans. Bloomberg News reported earlier this year that MUFG, Japan’s biggest lender, was in talks for a 20% stake for about $1.7 billion. MUFG has considered sweetening its offer, people familiar with the matter have said.

Facing sluggish growth at home, Japanese lenders such as MUFG and Sumitomo Mitsui Financial Group Inc. have been scouring for deals in Asia to boost revenues while also building out their investment banking operations.