Mizuho FG eyes 300 bil. yen capital raising amid credit crisis

TOKYO, Nov. 13 Kyodo -
Mizuho Financial Group Inc. said Thursday it is planning to raise up to 300
billion yen ($3.14 billion) in new capital amid the global financial turmoil
that is threatening to undermine the financial health of Japan's leading
banking groups.

Raising ''200 billion to 300 billion yen could provide us with a buffer to some
extent,'' Terunobu Maeda, president of one of three megabanks in the country,
told reporters.
The fresh capital will come through its issuance of preferred subscription
securities to undetermined investors, Mizuho Financial said. But it refrained
from providing other details including when it will occur.
Sources close to the matter said the issuance may come by the end of the year
at the earliest.
The move is likely as falling stock prices and a gloomy economic outlook have
increasingly hurt the group's balance sheet.
Also Thursday, Mizuho said its group net profit for the first half of fiscal
2008 fell 71 percent from a year earlier to 94.58 billion yen and that its
profit for the 12 months through March 2009 is expected to decline 19.6 percent
to 250 billion yen.
Mizuho attributed the profit fall and projection to losses it incurred on its
stock investments amid the global financial turbulence, as well as growing
credit costs including loan-loss provisions at a time when its corporate
borrowers, especially smaller companies, have been affected by higher energy
and raw material costs.
The major Japanese banking group is considering issuing preferred subscription
securities to avoid per-share losses that would be incurred by shareholders
through the further issuance of common stock, the sources said.
It plans to sell the preferred securities, which will not be convertible to
common shares, mostly to Japanese insurance companies like Meiji Yasuda Life
Insurance Co., with which the bank has close ties, sources close to the matter
said.
Mizuho said it will set up a wholly owned subsidiary in the Cayman Islands to
issue the preferred securities.
Amid continuing turmoil in financial markets and plunges in global stock
prices, Japanese megabanks are facing evaluation losses on equity holdings and
the banks are taking measures to replenish their capital bases.
In order to maintain its stock price, Mizuho has already announced a two-year
plan to buy back around 800 billion yen worth of its own shares. While it has
already carried out a buyback worth 150 billion yen, sources have said it will
postpone buying back the rest of the 650 billion yen worth of shares for the
foreseeable future.
In a separate move, Japan's largest banking group Mitsubishi UFJ Financial
Group Inc. has also said it plans to carry out a public offering of common
shares worth up to 600 billion yen, reportedly in mid-December, and to secure
390 billion yen through a third-party allocation of preferred shares later this
month.
Sumitomo Mitsui Financial Group Inc., another of the three mega-banking groups,
is also studying a capital increase, sources close to the matter said.
==Kyodo