Japan's Mizuho Financial Group is preparing to boost the capital of Mizuho Securities by some 100 billion yen (US$911 million) by the end of the year as the unlisted brokerage may suffer big subprime-related losses, the Yomiuri daily reported on Wednesday.
Mizuho Financial wants to shore up the brokerage's balance sheet ahead of the latter's planned merger with Shinko Securities in May because it may see its influence on the merged entity reduced if Mizuho Securities' capital were to fall, the paper said.
Mizuho Securities is likely to issue new shares to Mizuho Corporate Bank to raise capital for the move, and Norinchukin Bank, which has a minority stake in the brokerage, was also approached about the capital injection, the paper said.
Mizuho Securities and Mizuho Corporate Bank are subsidiaries of Mizuho Financial. Mizuho Financial spokeswoman Masako Shiono declined to comment on the report.
Mizuho Securities posted a first-half loss of some 27 billion yen after suffering subprime-related losses at its European operations, and it expects about a 65 billion yen loss in the second half ending in March, the paper said.
Mizuho Financial had planned to merge the brokerage with Shinko, in which it holds a 15 percent stake, in January to create Japan's fourth-largest brokerage in terms of assets under management.
But the deal was delayed until May, with the bank citing the uncertain outlook for financial markets brought about by the subprime issue.
Shares of Mizuho Financial fell 2.0 percent to 591,000 yen, underperforming the 1.2 percent fall in the Tokyo exchange's bank sector subindex.