Mitsubishi UFJ Financial seeks £6.58bn via rights issue

Mitsubishi UFJ Financial Group is planning to shore up its balance sheet by raising 990 billion yen (£6.85 billion, $10.5 billion) by issuing new shares.

Japan’s largest bank is to issue common stock of 600 billion yen and 390 billion yen of preferred shares.

The news came after Japan’s Nikkei index closed 6% down – its lowest close since 1982. Shares in the bank closed down 15% following the news.

As with other financial institutions, Mitsubishi UFJ’s market value has dwindled amid the falling stock market. Investors have sold shares in the Japanese banking giant amid fears that their heavy exposure to domestic equities could spark the huge losses that have affected its counterparts on Wall Street.

However, Japan’s Government has announced steps to relieve the strain on banks. Prime Minister, Taro Aso, said the Government would expand a scheme that provides banks access to public funds and also strengthen regulation on the short-selling of shares.

In related news, last month it was announced that Mitsubishi UFJ is to acquire a 20% stake in Morgan Stanley for $9 billion (£4.8 billion). Furthermore, it is to pay $3.5 billion in cash to take full control of UnionBanCal, California’s second-largest bank, and is to increase its stake in Acom (the Japanese consumer lender) from 16% to 40%.