Tokyo, Feb. 11 (Reuters): US investment bank Merrill Lynch & Co Inc is in the final stages of talks on acquiring 150 billion yen ($ 1.25 billion) of shares in Mizuho Holdings Inc, the world’s largest bank by assets, a newspaper said on Tuesday.
The Sankei Shimbun newspaper said the shares would be part of one trillion yen of new shares Mizuho plans to issue by the end of the business year in March to shore up its capital.
Officials at Mizuho and Merrill Lynch were not immediately available to comment.
Mizuho said on Thursday it would raise 850 billion yen ($ 7.08 billion) through the issue of preferred shares in three lots. Mizuho has said it is seeking to raise around one trillion yen by the end of March to shore up its capital, hit hard by huge stockholding losses and loan-loss charges against risky borrowers.
Some analysts have been concerned that Mizuho may not achieve its target for the fresh funding, which is the largest capital increase ever by a Japanese firm. However, others said Mizuho could easily achieve the amount given its extensive business relationships with 70 per cent of listed Japanese companies.
Mizuho decided to seek the financing after forecasting nearly two trillion yen in group net losses for the year to March, the largest ever corporate loss in Japan.
Mizuho, like other Japanese banks, needs to prevent its capital from eroding further as the government steps up pressure on banks to clean up their balance sheets.
Faced with the risk of further capital erosion, Japan’s megabanks have used a variety of means to boost capital ahead of the March book-closing to dispel lingering worries about nationalisation.
Merrill Lynch said in December it planned to inject 100 billion yen into Japan’s UFJ Holdings, for a new UFJ unit that will take over UFJ’s problem loans.
Sumitomo Mitsui Financial Group turned to Goldman Sachs Group for 150 billion yen in fresh capital.