Sumitomo Mitsui Financial Group (SMFG), Japan's third-largest bank by assets, plans to raise up to 800bn yen (£5.5bn) by issuing new shares to meet stricter capital requirements and for potential acquisitions in Asia, people with knowledge of the matter said.
SMFG is the latest big Japanese lender to tap a modest stock rebound for much-needed fundraising. Industry leader Mitsubishi UFJ Financial Group raised about 1 trillion yen last month through a share sale.
Without these fundraisers, Japanese banks would fall short of new global capital requirements, analysts have said. The SMFG move is likely to put pressure on second-ranked Mizuho Financial Group, which has yet to announce fundraising plans.
“If the news is confirmed, the capital enhancement would be positive from a credit perspective,” said Masahiko Watanabe, a credit analyst at Fitch Ratings in Tokyo.
“However, Sumitomo Mitsui’s underlying profitability is still not so strong, so how they improve their profitability remains the challenge.”
The fundraising will be SMFG’s second in less than a year, after raising 861bn yen in July.
SMFG’s board will meet as early as today to formally approve the 800bn yen fundraising, said five people, who were not authorised to speak publicly about the matter.
The bank has begun preparing for the sale and will decide the terms by the middle of this month, they said.
The bank’s president Teisuke Kitayama said that while nothing had been decided about fundraising, such a move would be needed.
“Capital raising is necessary for our future undertaking of the businesses,” he said.
City A.M. Reporter