MUFG to raise about 1 tril. yen in private allocation, new shares

TOKYO, Oct. 27 Kyodo - Mitsubishi UFJ Financial Group Inc. said Monday it will raise about 1 trillion
yen in fresh funds by issuing preferred and common shares to shore up its
capital base amid the global financial turmoil.
The largest Japanese financial group said it will issue up to 600 billion yen
worth of common shares during a one-year period from Nov. 4.
It also said it will secure 390 billion yen through a third-party allocation of
preferred stock. The ''bond type'' preferred shares will not be convertible to
common shares, MUFG said.
Although the number of preferred shares to be allotted has yet to be decided,
MUFG said it will ask for 2,500 yen per share and the offer will take place on
Nov. 17.
It is thought that the financing program will raise MUFG's equity capital ratio
by up to about 1 percentage point to over 10 percent, compared with 8 percent
required for internationally active banks.
MUFG ''aims for enhanced stabilization of its financial base and further
corporate growth as a global financial group by implementing this capital
reinforcement,'' the banking group said in a statement.
Amid a global equity sell-off, MUFG's share price has plunged over 44 percent
during this year, closing Monday at 583 yen, down nearly 15 percent from
Friday.
While Japanese banks have mostly emerged unscathed from a credit squeeze
triggered by the U.S. subprime mortgage crisis, the plan to reinforce its
capital base comes after MUFG's $9 billion investment in struggling U.S.
investment bank Morgan Stanley earlier this month.
MUFG has also been making large-scale investments since August to turn its
California-based subsidiary UnionBanCal Corp. into a wholly owned unit and
Japanese consumer loan lender Acom Co. into a subsidiary.
Sources close to the matter have suggested other Japanese financial giants such
as Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are
also studying capital increases.
Banks are expected to have posted large profit falls in the April-September
first half of the current fiscal year due to an increase in the disposal of bad
loans amid slowing economic activity.
==Kyodo