Friday May 15, 10:46 AM
Japan's Mizuho, deep in red, to raise new funds
By Miwa Suzuki
TOKYO, May 15, 2009 (AFP) - Japan's Mizuho Financial Group said Friday it aimed to raise about eight billion dollars to shore up its finances after suffering its first annual loss in six years due to the credit crunch.
Japan's top banks were initially seen as relatively immune to a US-born credit crunch, but they have been badly burned by the financial crisis, partly because they have a large exposure to the stock market.
Mizuho, Japan's second largest bank, said it would sell new shares worth up to 600 billion yen (6.2 billion dollars) to help it through the financial turmoil and to invest in its overseas businesses.
It also aims to sell preferred securities worth about two billion dollars, group president Takashi Tsukamoto told reporters.
While the economic downturn worsened credit conditions in the United States and Europe last year, there is still demand for funds in Asian nations such as China and India, he said.
"We used our capital mainly for small and medium-sized companies at home last year but we want to distribute it for the sake of our business growth in Asia," he said.
Mizuho announced a net loss of 588.8 billion yen for the year to March, against a year-earlier profit of 311.2 billion yen.
"I realised once again that Japanese banks are very vulnerable to an economic downturn," Tsukamoto said.
"We were hit by 500 billion yen of credit costs and another 500 billion yen in losses on stock holdings, both because of the economic slump," he said.
Mizuho will not seek government money, he added, describing public funds as a "last resort."
The group expects to return to the black this year with a net profit of 200 billion yen.
On top of the financial crisis, Japan's banks are being pressured by the country's shrinking population and low interest rates, which are making it harder for them to grow their revenues.
Sumitomo Mitsui Financial Group (SMFG), Japan's number three bank, said Friday it had lost 373.46 billion yen in the year to March, against a year-earlier profit of 461.54 billion yen.
It forecast a net profit of 220 billion yen for this year.
Soon afterwards Fitch Ratings said it had downgraded its credit rating on SMFG to "A" from "A-plus" due to the bank's "poorer-than-expected performance in the financial year ended March 2009, and weaker capital quality."
Despite their own woes, Japanese financial firms have seized the opportunity offered by the credit crunch to buy a slice of struggling Wall Street giants.
Mizuho last year invested 1.2 billion dollars in Merrill Lynch (NYSE: MER - news) while Mitsubishi UFJ bought a 21 percent stake in Morgan Stanley (NYSE: MS - news) . Securities firm Nomura snapped up large parts of failed Wall Street bank Lehman Brothers (NYSE: LEH - news) .
Sumitomo Mitsui said earlier this month that it had agreed to buy Citigroup (NYSE: C - news) 's Japanese brokerage arm as part of a 545-billion-yen deal with the troubled Wall Street giant.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
