Biggest bank in Japan set to raise $11bn
JAPAN’S biggest bank Mitsubishi UFJ Financial Group (MUFG) is set to launch the biggest-ever cash call by a Japanese financial firm.
Mitsubishi is believed to be preparing to issue about $11bn (£6.6bn) in new shares to meet stricter capital requirements and boost lending in Asia. The share issue of about one trillion yen is believed to represent a record for a Japanese financial firm.
MUFG is understood to be planning to issue the shares by the end of the year.
Japanese banks have already raised $15bn this year by issuing shares, but have been tipped to tap resurgent equity markets for more as worldwide regulators plan new rules obliging them to hold more capital.
Leading industrial and emerging market countries agreed in September to finalise new capital rules by the end of 2010 and to try to implement tougher capital rules for banks by the end of 2012.
Japanese banks have previously raised funds by issuing preferred securities and preference shares, but neither of these count toward core tier-1 capital, a measure of high quality capital against risky assets likely to be the norm under new global rules.
MUFG also wants a firmer capital base to boost lending to companies in fast-growing Asian economies, a key part of its overseas growth strategy.
The bank could officially file for the issue on November 18, when it is due to report interim earnings.
An MUFG spokesman declined to comment.
MUFG raised 800 billion yen in December by issuing common and preferred shares to replenish its capital after suffering from falls in the value of its share portfolio and making a $9bn investment in US bank Morgan Stanley.