S'tomo Mitsui Trust To Pay Back Remaining Public Funds

TOKYO (Nikkei)--Sumitomo Mitsui Trust Holdings Inc. (8309) said Friday that it will pay off the roughly 200 billion yen balance from the public funds it obtained in the late 1990s.

The stock market recovery has provided the opportunity to buy back at a higher price the common shares it issued to the government in exchange for taxpayer funds.

On Friday, Sumitomo Mitsui Trust's stock rose 28 yen on the day to end at 427 yen, surpassing the 400 yen book value of the shares held by the government. The firm will purchase the shares in off-hours trading on Monday based on Friday's closing price.

It plans to buy back 530 million shares, including those owned by the government, for 226.3 billion yen. The government stands to pocket an estimated 13.5 billion yen profit.

In the latter half of the 1990s, the government infused funds into domestic financial institutions to shore up their battered finances and stave off a financial system crisis.

Sumitomo Mitsui Trust's pre-merger institutions obtained about 1.01 trillion yen combined in 1998 and 1999. The bank gradually whittled down the balance, and is now set to make the final repayment to the government, which is its top shareholder with around 12% of voting rights.

The government had been pressing financial institutions to pay back more than the original amounts borrowed, but weak share prices had deterred them form settling the balance sooner.

(The Nikkei, March 9 morning edition)

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