Sumitomo to launch 5.7bn rights issue

<div>JAPAN&rsquo;S&nbsp;second largest bank by market value, Sumitomo Mitsui Financial Group, yesterday announced a giant &pound;5.7bn share sale, buoyed by strong demand from overseas and domestic investors.<br /><br />The Japanese mega-bank said it will raise 923.1bn yen (&pound;5.7bn) by issuing new common shares, making it one of the biggest fundraisings in Japanese corporate history.<br /><br />The bank plans to sell 235m shares at 3,928 yen each, a 9.7 per cent discount to Friday&rsquo;s closing price. The fundraising will dilute existing shareholders&rsquo; stakes by 30 per cent.<br /><br />Daiwa Securities SMBC and Goldman Sachs will underwrite the transaction, and after fees, Sumitomo looks set to pocket in total 885bn yen.<br /><br />Shares of Japanese banks have risen about 45 per cent in the last three months, recovering from a six-year low earlier in March.<br /><br />The fundraising will be seen as an extension of the bank&rsquo;s aggressive attempt to grab market share at home by beefing up its securities business. In May, Sumitomo made a winning bid for Citigroup&rsquo;s Japanese brokerage.<br /><br />Sumitomo Mitsui posted a much greater than expected 390bn yen net loss due to the economic turmoil during the&nbsp;year ending 31 March, far off the 180bn yen profit it had projected and the 462bn yen profit it made the previous year.<br /><br />But economists now believe that the worst is over for the Japanese economy as the country&rsquo;s three largest banks, Sumitomo, Mitsubishi UFJ and Mizuho Financial are all forecasting a return to profit this year after reporting combined losses of around 1.22 trillion yen last year.&nbsp;</div>