In a filing with the Tokyo Stock Exchange, MUFG said it tested 3.8 trillion yen ($30.6 billion) worth of shares, about 70 percent of its cross-shareholdings, against the new criteria. About 20 percent of the shareholdings tested do not meet the criteria and the bank will consider selling them unless their returns improve, it said.
The bank did not disclose the specifics of the criteria, but said both direct and indirect returns of the holdings are taken into consideration in determining whether they are met or not. MUFG did not specify by when the returns need to improve before it takes a decision to sell the shares.
While the major Japanese lenders have indicated that they are gearing up to reduce their cross-shareholdings, MUFG is the first big bank to disclose details of its plan. Other banks are expected to follow suit.
The move is expected to be viewed as positive for corporate Japan and will be relatively benign for its stock market, some analysts said.
Japan’s megabanks have already reduced a lot of cross-shareholdings in the past, so the negative impact of their unwinding on stock market is limited, said Nomura Securities analyst Kengo Nishiyama. Rather, it is positive in that it will diversify shareholders of Japanese companies. ($1 = 124.2200 yen)