Japanese banks are less reluctant to finance hostile takeovers, a lobbying chief said. By Reuters

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) – Japanese banks have become less reluctant to finance hostile takeovers because the government’s new takeover guidelines have removed a taboo against such deals, the head of the country’s new banking lobby said.

Comments by Akihiro Fukutome, chairman of the Japan Bankers Association (JBA), provide evidence of a sea change that has helped Japan move closer to Western-style trading.

“Banks have previously worried about reputational risks when supporting unsolicited bids,” Fukutome said in an interview. “But I think the new acquisition guidelines from the Ministry of Trade, Industry and Energy last year helped lower the psychological hurdle.”

Hostile bids, once shunned as disruptive to Japan Inc’s spirit of cooperation, are still relatively rare, but their frequency is increasing.

The Ministry of Economy, Trade and Industry last year issued new M&A guidelines aimed at cracking down on excessive defensive tactics, removing long-standing stigmas about unsolicited bids and promoting corporate takeovers.

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

Fukutome, who is also head of core banking at Mitsui Sumitomo (NYSE:) Financial Group, said banks should consider unsolicited offers if the deal benefits the target company and helps improve its long-term value.

He added: “The tone towards unsolicited bids is changing and we have seen an increase in such transactions in our pipeline.”

There have been three hostile takeover proposals in Japan in the past 12 months, including Brother Industries’ bid to block a management takeover of Roland DG, according to LSEG data.

Japanese investment bank Daiwa Securities Group said it could advise a hostile acquirer on the merits of the deal if it would benefit the target company or industry.