Mitsubishi UFJ Financial Group Inc. completed repayment Friday of the public funds that the government funneled into its capital base in the late 1990s, becoming the first to do so among the nation’s three megabank groups, Deposit Insurance Corp. said.

The final portion of the funds repaid stood at 300 billion yen, according to the state-backed guardian of the nation’s banking system.

The final portion was repaid with DIC converting its holdings of MUFJ preferred shares into common shares and then selling them off to individual investors on the market, DIC said.

Proceeds from the sale of the common shares came to 410 billion yen. The difference of roughly 100 billion yen between the final portion and the proceeds ended up as gains for the national coffers.

When Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. fused their management on Oct. 1 to create MUFG, it assumed UFJ Holdings’ obligation to pay off the 1.4 trillion yen in debts that UFJ Holdings’ component banks had incurred via acceptances of public capital in the late 1990s.

In total, the government gained 440 billion yen in a series of preferred share selloffs in addition to recovering the 1.4 trillion yen principal.

Among the two other megabank groups, Mizuho Financial Group Inc. is to complete the repayments of its debts to the government in July.

Sumitomo Mitsui Financial Group Inc. is seeking to complete repayment of its debts to the government by the end of fiscal 2006.

In 1998 and 1999, the government injected public funds into the depleted capital bases of major banks to help stabilize the banking system, which had taken a serious blow from massive bad loans left after the early 1990s burst of an asset-price bubble.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.