Lehman to invest $1.25bn in Japan's UFJ

UFJ, one of Japan's four largest banks, is poised to receive a ¥150bn ($1.25bn) capital injection from Lehman Brothers in the latest of a series of investments by Wall Street's leading finance companies into Japan's struggling banking sector.

......UFJ's decision to tap the market for additional capital so soon after the end of the financial year in March sends out a strong signal that it continues to face difficulties.

......Bankers said Lehman Brothers was planning to buy preferred shares worth between ¥100bn and ¥150bn in a new subsidiary set up to manage ¥500bn of UFJ's crossheld shares and then oversee their disposal. Lehman declined to comment.

International investment banks have increased their exposure to Japan's banks in recent months,.......

.....believe that reform of Japan's lenders is generating significant opportunities to participate in the corporate restructuring that accompanies bad-loan disposal or assist in disposing of the banks' huge share portfolios.

An announcement will be made later this week that Lehman Brothers is to be appointed as an adviser to the new company and will second staff with expertise in derivatives, hedging strategy and other aspects of portfolio management.......