Megacrunch time

16 November 2009 By John Foley Follow @johnsfoley

Mitsubishi UFJ may raise $11bn ahead of onerous new global rules on bank capital. If its two big rivals follow, some $46bn could be drained from the market, depriving others of capital. Yet it is not clear that Japanese banks really need the cash.

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Mitsubishi UFJ Financial Group, Japan's biggest lender, was expected to announce a Y1 trillion ($11bn) equityraising in its halfyear results, scheduled for November 18, according to Japanese press. MUFG, which bought a 20% stake in WallStreet bank Morgan Stanley in 2008, already raised $4bn in December.

Japanese financial groups raised $27bn in the year to date, according to data from Dealogic, making up 71% of the country's total equity issuance. Sumitomo Mitsui Financial Group raised $9bn in June, and Mizuho Finanical Group raised $6bn in July. Brokers Daiwa and Nomura have also raised a combined $10bn.

Proposals to strengthen global bank regulations are expected to be released by the Basel Committee in December. A preliminary statement in September suggested that areas of concern included Tier1 capital ratios, total leverage ratios, and extra capital buffers for systemically important institutions.

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