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OSAKA — Resona Holdings Inc., which includes Daiwa Bank and Asahi Bank, will boost its capital by issuing new shares if its capital adequacy ratio falls as a result of increased loan-loss charges, President Yasuhisa Katsuta said in a recent interview.

“It wouldn’t matter much whether we can keep the capital adequacy ratio above 8 percent or not,” Katsuta told Kyodo News. “But if the ratio falls as a result of increased loan-loss provisions, we’ve got to think about a capital hike.”

He added, however, that the capital increase would likely be made by issuing preferred securities rather than common shares.

The capital adequacy ratio of Resona Holdings stood below 8 percent at the end of last September, making it the first major Japanese banking group with a ratio under 8 percent, the threshold figure required for internationally operating banks.

Katsuta said Resona would not necessarily have to meet the 8 percent rule because it has already withdrawn from overseas operations.

Commenting on the planned merger between Daiwa and Asahi banks in March, Katsuta said the lenders have spent a full year preparing to integrate computer systems.

“We must not make mistakes . . . we have made sufficient organizational arrangements so that no problems occur,” he said.

As for its earnings outlook, Katsuta said Resona may fall into the red for the full fiscal year through March 31, although it posted profits for the fiscal first half that ended last Sept. 30, if it has to increase loan-loss charges.

To bolster profitability, he said, Resona may have to raise lending rates based on real risks while cutting funding costs.

“The problem is personnel costs. But we will review pay schedules after the merger,” Katsuta said.

Bank stocks steady

Share prices in major banks remained steady Wednesday, with Mizuho Holdings rising for the eighth straight session, sparked by an announcement the day before concerning a massive fundraising effort.

Mizuho advanced 3,000 yen to 128,000 yen.

Sumitomo Mitsui Financial Group was up 4,000 yen to 389,000 yen, stretching its winning streak to seven days.

Both banks have apparently convinced investors that their efforts to replenish their capital bases will alleviate many of the downside risks in owning bank stocks.

UFJ Holdings rose to 151,000 yen before closing unchanged at 145,000 yen. It had climbed for seven sessions through Tuesday.

Mitsubishi Tokyo Financial Group, meanwhile, fell prey to profit-taking, dropping 13,000 yen to 710,000 yen. It had been on a six-day winning streak through Friday.

Shares in the four major banking groups began rising last week after news reports that U.S. investment bank Goldman Sachs Group Inc. will help bolster SMFG’s finances by buying preferred shares worth 150.3 billion yen.

“Players such as overseas hedge funds covered shorts in bank shares as they eased concerns over (Japan’s) financial system” ahead of the March 31 book-closings for fiscal 2002, said Hiroichi Nishi of Nikko Cordial Securities Inc.

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