SMFG says capital raising could reach $9.1 billion

TOKYO (Reuters) - Sumitomo Mitsui Financial Group (8316.T), Japan's third-largest bank, said its planned share issuance could reach as much as $9.1 billion, surpassing a previously announced range.

The bank, which successfully bid for Citigroup's (C.N) Japanese brokerage this month, said in a statement that it would issue 204.4 million new shares. They would be worth 760 billion yen ($7.9 billion) at Thursday's closing price of 3,720 yen.

However, a spokeswoman for the bank said it could offer up to an additional 30.6 million shares through an over-allotment option, given demand from investors. That would put the total shares at 235 million and the fundraising at 874.2 billion yen ($9.1 billion).

Sumitomo Mitsui said in April it would raise up to 800 billion yen through the sale, diluting the value of existing shares by up to 30 percent.

Japan's three largest banks have so far announced plans to raise up to $41 billion in fresh capital, mainly through issuing preferred securities and common stock.

Separately, Mitsubishi UFJ Financial Group (8306.T), Japan's largest bank, said on Thursday it would issue an undecided amount of preferred securities to strengthen its capital base. Mitsubishi UFJ said in a statement it had yet to decide the amount and timing of the issuance. Preferred securities are not convertible to common stock and thus do not dilute existing shareholder value.

The bank also said it would redeem 130 billion yen ($1.36 billion) of existing preferred securities. At least part of the new issuance will be used for refinancing following the redemption, a spokesman said.

However, the Nikkei business daily reported that Mitsubishi UFJ aims to issue about 400 billion yen ($4.17 billion) in preferred securities as early as this summer through a yet-to-be-created special-purpose unit.

MUFG will likely use the proceeds to redeem outstanding preferred securities and strengthen its capital, the paper said.