Sakura Bank plans to increase its capital by about 300 billion yen within this fiscal year by requesting major firms under the Mitsui group, the bank’s largest shareholder, and other clients to purchase new shares, bank officials said Monday.
Sakura Bank is currently negotiating with Mitsui & Co., Mitsui Fudosan Co. and Toyota Motor Corp., one of its major clients, Sakura President Akishige Okada told a news conference.
The attempt to raise more capital appears related to the declining value of banks’ stock portfolios — a major part of their capital holdings. With the fiscal half-year due in September and the Tokyo Stock Exchange plumbing new lows, Japanese banks will be hard put to keep their capital levels above the eight percent global standard set by the Bank for International Settlements.
The three companies being approached by Sakura have indicated that they are ready to offer funding through purchases of the additional shares, although details, such as the number of companies that will buy stock and the specific amount, have yet to be decided, the officials said.
The bank is the main creditor bank for the Mitsui group, and the group is the bank’s top shareholder. At the end of fiscal 1996, the group held more than 16 percent of the bank’s total outstanding shares. Sakura is also Toyota’s main creditor, and the carmaker owns about 2.4 percent of Sakura’s shares.
The move, which may be implemented this month, is seen as an attempt by Sakura to regain market confidence, which continues to ebb due to the huge amount of its bad loans.
It is also seen as an attempt to improve its financial health as the “Big Bang” financial deregulations take hold.
The price of its shares fell below 220 yen at the end of last week.
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