The increasingly aggressive global march of Japanese banks made fresh advances on Friday as it emerged that the country’s largest bank may have entered merger talks with Morgan Stanley for the Wall Street group’s Japanese brokerage arm.

Sources close to Mitsubishi UFJ told The Times that Morgan Stanley’s well-established equity division in Japan would form a “highly desirable” part of its efforts to extend the scope and sophistication of its trading operations and investment banking division. Mitsubishi executives believe they can negotiate an arrangement whereby the two groups would share Japanese customers.

The deal, if completed as planned, would create Japan’s third largest securities house, although it will lag significantly behind Nomura, which last week swallowed up the Asian and European operations of Lehman Brothers.

As the financial meltdown erupted, Mitsubishi UFJ and Morgan Stanley joined forces. The two said last week that they had struck a deal whereby Mitsubishi UJF Securities would pump 950 billion yen (£5.1 billion) into the embattled US investment bank in exchange for a stake of about 21 per cent.

A spokesman for Morgan Stanley said that while nothing concrete had been decided, MUFJ and Morgan Stanley were “looking forward to continuing discussions of all the options to maximise the strategic benefits of global alliance.”

He added that the pace of talks had been affected by Nomura's lightning swoop on Lehman Brothers, which extends its dominance of the domestic market and, by some measures, creates the world's biggest independent investment bank.

But the Japanese financial sector’s eagerness to bring its healthy store of capital to bear on the distressed international scene did not end there.

The rural-based Norinchukin Bank said on Friday that it had bought 30 billion yen of shares in France’s Credit Agricole in an extension of a partnership that dates back years.

In addition, Mitsubishi UFJ Trust and Banking said yesterday that it would pay around 40 billion yen for a 19.9 per cent stake in Aberdeen Asset Management.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive