TOKYO -- Nissan Motor Co. Ltd. said on Wednesday it would not buy shares in Japanese bank Mizuho Financial Group Inc., which is trying to bolster its capital by 1.0 trillion yen ($8.54 billion) by March 31.
The decision could deal a blow to the efforts of Mizuho -- the world's largest bank group by assets -- to replenish its capital eroded by huge bad-loan costs and stock losses.
Mizuho is expected later on Wednesday to release the names of major companies that will buy its shares.
The Nihon Keizai Shimbun had said Nissan and two or three of its group companies would provide struggling Mizuho with fresh capital totaling several billion yen, but Japan's third-largest auto maker said the report was incorrect.
"Nissan decided and informed Mizuho that it will not buy stock in the company," Nissan spokesman Gerry Spahn said.
Nissan, which has staged a major turnaround in recent years on cost-cutting under the leadership of Carlos Ghosn, says it has no holding in Japanese banks and no marketable securities.
The liquidation of its bank holdings has helped the auto maker, 44.4 percent owned by France's Renault, trim its net automotive debt to an expected 80 billion yen as of this month from 2.1 trillion yen in 1998/99.
Sources close to the situation said Nissan also recently cashed out a 10 billion yen bond purchased in 1998 from Mizuho group banks.
As part of its restructuring, Nissan sold off all its holdings in the banks that merged to form Mizuho -- Industrial Bank of Japan, Fuji Bank and Dai-Ichi Kangyo Bank -- with the final shares unloaded by March 2002.
SHARES DOWN IN DEBUT
Mizuho is trying to raise 850 billion yen from domestic investors and up to 150 billion yen overseas to replenish capital as it lurches towards posting what is forecast to be Japan's largest-ever corporate loss in the year ending this month.
Despite concerns that Mizuho may not collect the one trillion yen it wants, Mizuho sources have told Reuters they are confident of overshooting that target.
Earlier this month, Japan's largest steel maker, JFE Holdings Inc., and the smaller Kobe Steel Ltd. said they had agreed to inject capital into Mizuho.
JFE said it would inject 10 billion yen while Kobe said it would offer three billion yen.
Tokyo Electric Power Co. has also said it would extend 10 billion yen, saying the bank was its core financial partner and the move would help cement business relationships.
The Nissan news came as an extra bearish factor weighing on the shares of Mizuho Financial, a new umbrella company for the Mizuho group, on its debut on the first section of the Tokyo Stock Exchange on Wednesday.
Traders had expected Mizuho Financial shares to face pressure given that those of its peers have tumbled sharply since March 5.
In early trading, Mizuho was at 104,000 yen, 7.2 percent below the 112,000 yen close on March 5 of now-delisted Mizuho Holdings Inc.