Mitsubishi UFJ Financial Group Inc. said Tuesday it will repay on Wednesday 323.6 billion yen of the 1.4 trillion yen in public funds it received from the government to bolster its capital base.
The funds, in preferred shares owned by Deposit Insurance Corp., will be converted to common shares and sold back to MUFG during off-hours trading on the Tokyo Stock Exchange.
The deal will bring the government a 26.2 billion yen profit if the shares are converted at MUFG's closing price of 1.4 million yen per share Tuesday.
MUFG was created by the merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. It is now the world's largest banking group by assets.
Although MTFG had already repaid all its public funds, UFJ entered the corporate marriage with an obligation to repay 1.4 trillion yen in public funds it received from the government to bolster its capital base and prevent a banking crisis.
MUFG is set to promote the repayment in a bid to expand its management leeway.
MUFG President Nobuo Kuroyanagi said the bank group will make the repayment "promptly but without strain."
Analysts said MUFG may be able to repay the remaining 1.076 trillion yen by the end of the next fiscal year, which ends on March 31, 2007.
The megabanks reportedly succeeded in disposing of most of their nonperforming loans recently and are now competing to repay the public funds injected by the state.