Japanese banks less reluctant to finance hostile takeovers

TOKYO – Japan's new banking lobby chief said Japanese banks have become less reluctant to finance hostile takeovers as the government's new takeover guidelines lift restrictions on such deals.

The comments by Akihiro Fukutome, head of the Japanese Bankers Association, offer evidence of a major shift in Japan that has helped bring it closer to Western-style bargaining.

“Banks were previously concerned about the reputational risks in helping unsolicited bids,” Fukutome said in an interview. “But I believe the Industry Ministry's new acquisition guidelines last year have helped reduce the psychological barriers.”

Hostile bids, which were once seen as disruptive to Japan Inc.'s cooperative ethos and hence rejected, are still relatively rare, but the frequency is increasing.

New M&A Guidelines

The Ministry of Economy Trade and Industry (METI) last year issued new M&A guidelines aimed at cracking down on excessive defense tactics, unsolicited bids and removing the long-held stigma about promoting corporate takeovers.

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The non-binding guidelines have already prompted companies such as electric motors maker Nidec and life insurer Dai-ichi Life Holdings to launch hostile takeover bids.

Fukutome, who also heads Sumitomo Mitsui Financial Group's core banking arm, said banks should consider unsolicited offers if a deal would benefit the target company and help improve its long-term value.

Read: Nidec CEO lauds Japan's new rules aimed at making acquisitions easier

“The environment of unsolicited bids is changing and we have seen an increase in such deals in our pipeline,” he said.

There have been three hostile takeover offers in Japan over the past 12 months, including Brother Industries' bid to thwart a management buyout at Roland DG, LSEG data shows.

Japanese investment bank Daiwa Securities Group has said it is prepared to advise a hostile acquirer on merits if the deal would benefit the target company or its industry.