OITA (Kyodo) Howa Bank, a regional bank in Oita Prefecture, said Thursday it will issue 3 billion yen worth of shares to Nishi-Nippon City Bank, a regional bank in Fukuoka Prefecture, through a third-party allocation.
Howa Bank said earlier this week it will ask the Financial Services Agency later this year for an injection of 9 billion yen in public funds to replenish its capital.
The latest decision was approved at an extraordinary meeting of shareholders Thursday, along with amendments to Howa Bank's corporate charter to allow the bank to sell up to 6 billion yen worth of new shares to its business partners, Howa said.
The exact sum to be raised through these third-party allocations and the buyers other than Nishi-Nippon City Bank will be decided at a board meeting Friday, the bank said.
The public funds and the proceeds of new share sales, whose combined total is expected to reach 18 billion yen, are estimated to bring the bank's capital adequacy ratio to 9.64 percent.
Howa Bank's capital ratio had dropped to 2.29 percent as of March 31 from 8.56 percent at the end of last September because of sizable bad-loan disposal costs.
Banks must have a ratio of at least 4 percent to run domestic operations.