Japan's third largest bank, Sumitomo Mitsui Financial Group, has hiked up its May plan of share sale from 800 billion yen to 923 billion yen ($9.4 billion), making it the biggest stock issue in Japanese corporate history.

The Tokyo-based bank today said in a document filing with the Japanese finance ministry, that it planned to sell 235 million shares at ¥3,928 each, a 9.7 per cent discount to Friday's closing price of ¥4,350 from Tuesday.

Although Japan's economy is facing the worst recession since World war 11, Sumitomo Mitsui has hiked up its capital raising on the back of the recent improvement in financial stocks globally led by strong demand from local as well as overseas investors.

Japan's Nikkei 225 stock market index, which was low during the month of March, has since gained more than 40 per cent and for the first time since November and went above the 10,000-point mark last week. Sumitomo Mitsui's shares have gained 8.9 per cent since late May.

In April, the Nikkei business daily reported that Japan's three biggest banking groups- Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc, were expected to report net losses for the fiscal year ended 31 March amid the global financial crisis, (See: Japan's top 3 banks to report losses for first time)  but the stock of these banks have since risen by nearly 45 per cent.

In the fiscal year that ended March 3, Sumitomo Mitsui posted a net loss of ¥390 billion ($3.9 billion), falling way short of its profit projection of ¥180 billion while it posted a ¥462 billion profit the previous year.

Japanese banks have recorded the equivalent of $13.5 billion of losses tied to the meltdown in credit markets, according to the country's financial regulator. Sumitomo Mitsui has reported 130 billion yen of sub-prime- and credit-related losses

All the three biggest Japanese banks had said that they had plans to raise more than 4.6 trillion yen since November.

Mizuho Financial Group, Japan's second-largest bank by assets, had announced in May 15 that it would issue up to 600 billion yen worth of common shares and around 176 billion yen in preferred securities while Japan's largest bank, Mitsubishi UFJ Financial Group had raised 400 billion yen through share issue last year.

Sumitomo Mitsui, which expects to get 879.8 billion yen from the share sale after deducting fees, may use some of the money to fund its ¥545 billion May acquisition of Citigroup's brokerage and parts of its investment banking business in Japan.

The extra capital will also help it to beef up its capital base after its 2008 dismal financial results due to losses on equity-holdings and increased bad loans.