While the two banks worked together on various loans, they were never able to achieve a broad linkage.

BOOSTING BUSINESS TIES

Likewise, it remains to be seen whether or not Mizuho Financial Group's investment in Merrill Lynch will lead to a stronger relationship abroad.

Since the January deal, Merrill shares plunged until Bank of America agreed to buy it. Japanese media reported last week that Mizuho plans to boost it's business ties with BofA and Merrill.

Time will tell.

Morgan Stanley says its deal with MUFG is every bit a partnership.

"This alliance also would build on Morgan Stanley's deep ties and market leadership in Japan and throughout Asia," CEO John Mack said in Monday's statement. The resurgence of activity by Japanese banks is reminiscent of an aggressive push into the US in the 1980s, which was later derailed by the collapse of Japan's asset bubble.

While Japanese banks have long sought to boost revenues from abroad, they have so far not been very successful in establishing a sustained presence overseas.

"It gives MUFG a footprint in the US How effectively they can leverage that, and various other synergies, remains to be seen," said Jason Rogers, credit analyst at Barclays Capital.

The Morgan Stanley-Mitsubishi link-up came as the US investment bank was pulled into the financial market panic, sending its stock plummeting and forcing it to consider its options.

"My guess is that Mitsubishi UFJ would regard it as a bit of an option," said Rob Morrison, Chairman of Hong Kong-based brokerage CLSA. "They'll say 'we'll invest this money and see how the relationship pans out.' It's not every day you get to invest in a franchise like Morgan at that sort of entry level."

... contd.