Sumitomo Mitsui to launch Japan's largest share issue of $9.4 billion

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.