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Rising Costs, Declining Revenues Forcing Smaller Firms to Exit Municipal Finance Business, MUFG's Head of Public Finance Says

At Inaugural MUFG Explores Media Roundtable, Kevin Dunphy Cautions of Impacts to Local Service

Press Contact:
Rich Silverman
(212) 782-5953

New York, June 12, 2017 — Increased costs as an "unintended consequence" of regulatory reform are leading many small U.S. broker-dealers and financial advisors to abandon the municipal finance business, according to Kevin Dunphy, Managing Director and Head of Public Finance at Mitsubishi UFJ Financial Group, Inc. (MUFG).

Dramatically declining fees paid to underwriters and lower municipal bond issuance are other key reasons that small broker-dealers and financial advisors will continue to exit public finance, Mr. Dunphy added.

Mr. Dunphy made his remarks on July 18 in New York during the inaugural session of MUFG Explores, an issues-oriented series in which MUFG subject matter experts meet with journalists to discuss current newsworthy topics and trends.

"One of the biggest impacts of regulatory reform that I see – really as an unintended consequence – is the demise of the small municipal finance firm," Mr. Dunphy said.

"These firms suffer disproportionally because the increasing regulatory costs consume a greater share of their revenue, significantly reducing profitability.

"Further, when you combine the increasing regulatory costs with declining underwriting spreads and lower issuance, firms' margins are under severe pressure. The expectation for lower issuance will increase competition for the remaining deals and make matters even worse for these small firms."

As the smaller firms struggle to effectively compete with their larger, deeper-pocketed rivals, a number of U.S. municipalities are in danger of losing their most knowledgeable and reliable financial experts, Mr. Dunphy noted. Many of these firms have particular expertise in local markets, leaving some municipalities without access to the bankers that best understand their history and the intricacies of their needs.

"New compliance requirements decrease the amount of time bankers and advisors can spend with their clients," he said. "Ultimately, it will be the municipalities that bear the cost of regulations in the form of increased costs or rates, and the lack of supply."

Mr. Dunphy has more than three decades of experience as a municipal banker, including 18 years at Bank of New York as the founder and Head of its Public Finance and the Government Banking Divisions. He joined MUFG in 2010.

How will we pay for infrastructure needs?

At the roundtable, Mr. Dunphy also discussed the need for infrastructure spending. "While it is refreshing to hear the new administration talk about infrastructure investment plans," he said, "I am still waiting to understand how we will pay for it."

Mr. Dunphy noted that legislators' promises to upgrade the nation's bridges, roads and tunnels have been largely more talk than action. "Over the years, Washington has kicked the can down the road and, as a result, America's infrastructure is in dire need of repair, replacement, and new projects," Mr. Dunphy said.

MUFG, one of the world's largest financial institutions, is one of the biggest lenders in the public finance sector. Providing credit and complete banking services to governments, public authorities, and not-for-profits, MUFG has extended more than $11 billion of credit to public clients.

Future MUFG Explores roundtables are scheduled to delve into compelling subject areas including healthcare, retail, and Latin American finance.

About MUFG Americas Holdings Corporation
Headquartered in New York, MUFG Americas Holdings Corporation is a financial holding company and bank holding company with total assets of $150.6 billion at June 30, 2017. Its main subsidiaries are MUFG Union Bank, N.A. and MUFG Securities Americas Inc. MUFG Union Bank, N.A. provides an array of financial services to individuals, small businesses, middle-market companies, and major corporations. As of June 30, 2017, MUFG Union Bank, N.A. operated 361 branches, comprised primarily of retail banking branches in the West Coast states, along with commercial branches in Texas, Illinois, New York and Georgia, as well as 16 PurePoint Financial Centers and two international offices. MUFG Securities Americas Inc. is a registered securities broker-dealer which engages in capital markets origination transactions, private placements, collateralized financings, securities borrowing and lending transactions, and domestic and foreign debt and equities securities transactions. MUFG Americas Holdings Corporation is owned by The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mitsubishi UFJ Financial Group, Inc. The Bank of Tokyo-Mitsubishi UFJ, Ltd. is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc., which is one of the world's leading financial groups. Visit or for more information.

About MUFG (Mitsubishi UFJ Financial Group, Inc.)
MUFG (Mitsubishi UFJ Financial Group, Inc.) is one of the world's leading financial groups, with total assets of approximately $2.7 trillion (USD) as of March 31, 2017. Headquartered in Tokyo and with approximately 350 years of history, MUFG is a global network with more than 2,200 offices in nearly 50 countries. The Group has more than 140,000 employees and about 300 entities, offering services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group's operating companies include Bank of Tokyo-Mitsubishi UFJ, Mitsubishi UFJ Trust and Banking Corporation (Japan's leading trust bank), and Mitsubishi UFJ Securities Holdings Co., Ltd., one of Japan's largest securities firms. Through close partnerships among our operating companies, the Group aims to "be the world's most trusted financial group," flexibly responding to all of the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG's shares trade on the Tokyo, Nagoya, and New York (MTU) stock exchanges. Visit