Norinchukin Bank said Friday it will raise ¥1.9 trillion and replace its chief executive officer, following the largest losses on asset-backed securities of any Asian lender.
Deputy President Yoshio Kono will replace CEO Hirofumi Ueno effective April 1, the company said in a statement. Norinchukin, owned by more than 4,000 shareholders including farm, fishing and forestry cooperatives, will raise the funds from its members by the end of March.
The fundraising is the biggest in Asia since Industrial & Commercial Bank of China Ltd. collected $22 billion in the world's largest initial public offering in 2006. Norinchukin, which has about $875 billion in deposits, lost at least $10 billion on overseas asset-backed securities following the collapse of the U.S. housing market.
"They just collected all the money from their membership," said Kiyoko Ohora, an associate director at Standard & Poor's in Tokyo. "It seems they just moved money internally, so I don't see that being positive for their credit rating. It's clear that their capital ratio wasn't sufficient."
S&P cut Norinchukin's financial-strength rating in December, citing "material" pressure on capital. The bank had a Tier 1 consolidated capital-adequacy ratio of 6.83 percent under Basel II standards as of Dec. 31, down from 9.39 percent as of March 31, it said in a statement Friday.
At the end of December, Norinchukin still had ¥6 trillion of asset-backed securities, more than the market value of Wells Fargo & Co.
"Norinchukin's capital faces increasing impairment risk due to its relatively large exposure to foreign securitized financial products," Moody's Investors Service said in November, when it revised the outlook on the Tokyo-based bank's Aa2 credit rating to "negative" from "stable."
The Tokyo-based bank, founded in 1923, makes loans to farmers and fishermen.
Profit at the Tokyo-based bank plunged 95 percent to ¥7.8 billion in the six months ended Sept. 30.