Sumitomo Mitsui Financial Group Inc.'s unexpected $3.9 billion loss and plans to seek capital are adding to evidence that Japan's biggest banks may struggle to weather the deepening recession.
The Tokyo-based lender, the second-largest by market value, said Thursday it may raise as much as ¥800 billion to restore a balance sheet weakened by bad loans and losses on investments, including Barclays PLC. The news came a day after Moody's Investors Service cut the credit ratings of Mizuho Financial Group Inc. and said the bank may need more cash.
Sumitomo Mitsui, Mizuho and Mitsubishi UFJ Financial Group Inc. plowed a combined $11 billion into ailing Western rivals, fueling speculation that they would seize on the global credit crisis to expand abroad. The banks are now retrenching under the weight of swelling investment losses and a recession that's pushed bankruptcies to a six-year high.