Japan's 17 major banks decided as of Tuesday to raise a total of 8 trillion yen to 9 trillion yen, including several trillion yen in public funds, to shore up their capital bases, industry sources said.
If realized, it would mean fundraising on an unprecedented scale, the sources said.
Fuji Bank will ask for 1 trillion yen in public funds, while Dai-Ichi Kangyo Bank and several other major banks are considering increasing the amount of public funds they will request, the sources said.
In addition to public funds, nine banks are planning to raise a total of 1.8 trillion yen from the market. Financial authorities have repeatedly urged the major banks to put an end to their bad loan woes by the end of March.
On Monday, the Financial Reconstruction Commission announced it will require major banks to funnel money equivalent to 15 percent of the hardest-to-collect segment of their so-called second category loans into loan-loss reserves.
The new requirement will be imposed on banks that plan to ask the government for public funds to replenish their capital bases. The banks will finalize the amounts in line with an ongoing examination by the Financial Reconstruction Commission that began Tuesday, the sources said.
They are activating their fundraising from the market to avoid relying fully on the public funds, as they believe such a move would undermine confidence among market players and the general public.