According to a Bloomberg News report on Friday, citing sources with knowledge of the matter, Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) plan to seek opportunities to offload their Toyota shares through the automaker’s planned share buybacks.
Traditionally, Japanese firms have utilised cross-shareholdings to strengthen business relationships; nonetheless, this practice has faced scrutiny for potentially shielding management from activist or hostile investors.
In line with the current governance code in Japan, companies are now mandated to conduct an annual evaluation to ascertain the appropriateness of maintaining cross-shareholdings.
However, as per the report, this gradual offloading of Toyota stocks won’t happen overnight. Instead, it will take place across several years.
Collectively, the value of the strategic shareholdings owned by the two largest banks in Japan are worth $8.5 billion.
Toyota has yet to officially comment on the report. But, it is in line with its earlier plans to repurchase up to $6.4 billion (1 trillion yen) worth of shares (around 410 million) by April 2025. This could be how the banks will offload their massive holdings in Toyota.
The public reaction to the report was immediate. Toyota shares dropped by 2.0% in the afternoon rate. Nevertheless, this is minimal, suggesting that the market will bounce back almost immediately.