Japan's Mizuho Financial to raise new funds

Japan's number two bank Mizuho Financial, hit hard by the credit crunch, said today it would bolster its finances with a capital hike that reportedly could top $ 3 bn.     

Mizuho said it would issue preferred securities to domestic institutional investors through a subsidiary in the Cayman Islands.     

It said the size of the capital hike had not yet been decided. The Nikkei business daily reported the bank was considering tapping investors for some $3.1 billion.     

Mizuho last month slashed its profit forecast for this financial year by more than half, blaming the falling stock market, rising corporate bankruptcies and the collapse of Wall Street bank Lehman Brothers.    

Until recently Japan had been seen as relatively resilient to the global financial crisis, which has battered banks worldwide.     

But Japanese banks are now being squeezed by a plunging stock market and a Japanese economy on the brink of recession.     

Mizuho said the securities it will issue would not be convertible into common stock and so would not dilute the value of existing shares.     

Other Japanese banks are also hoping to raise cash on capital markets to help them weather the turbulence.     

Mitsubishi UFJ Financial, the Japanese megabank buying a chunk of Wall Street giant Morgan Stanley, said last month that it would tap investors for up to $10.5 bn.     

Sumitomo Mitsui Financial Group Inc, Japan's third-largest bank, is reportedly considering a similar move to Mizuho.