The Mizuho Financial Group Inc. said Tuesday it will return 616.4 billion yen of the 1.466 trillion yen in public funds it received to replenish its capital by the end of this month, and that it planned to pay back the remaining 850 billion yen in the first half of fiscal 2006.

Mizuho received 2.949 trillion yen in public funds in 1998 and 1999 as the government moved to boost the capitalization of its banks. The Tokyo-based megabank has vowed to repay all of it by March 2007.

For the first installment, Mizuho will buy back some of the preferred shares held by the state-backed Deposit Insurance Corp. on Aug. 28 and retire them immediately.

Mizuho will combine repurchases of DIC’s shareholdings and pay 692.9 billion yen. The government will thus receive a profit of 76.5 billion yen, or the difference between the buy-back price and the 616.4 billion yen it was issued at.

With this month’s installment, some 2.099 trillion yen, or 71.1 percent of the total injection, will have been returned.

While Mizuho has said it plans to return the 850 billion yen remainder by the end of fiscal 2006, it is shooting to complete repayment within the first half of the year.

The banking group initially intended to return about 800 billion yen, but gave up after the recent stock market rally boosted its purchasing costs, industry sources said.

But since Mizuho has set aside 970 billion yen for repurchasing shares in fiscal 2005, it may pay back even more than earlier stated.

As for the other major financial groups, Mitsubishi Tokyo Financial Group Inc. has returned all public funds it received but will have to pay back an additional 1.5 trillion yen after it merges with UFJ Holdings Inc. on Oct. 1.

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