Bank of Japan to Buy Shares in Companies From Banks

By Keiko Ujikane and Toru Fujioka

Feb. 3 (Bloomberg) -- The Bank of Japan will resume a program of buying corporate shares held by financial institutions to shore up their capital, which has been decimated by the global stock-market rout.

The central bank will buy 1 trillion yen ($11.1 billion) in shares through April 2010 and will hold onto them until March 2012 at the earliest, it said in a statement after its policy board met in Tokyo today.

The bank said it resumed the purchases “to support financial institutions’ future endeavors to reduce market risk associated with stockholdings, and through which to ensure the stability of the financial system.”

The plan is smaller than the last time the central bank purchased shares from 2002 to 2004, when it pledged to buy up to 3 trillion yen in equities. The bank started selling those shares in October 2007.

It stopped the sales last October, after the collapr="return escape( popwQuoteShort( this, 'LEH:US' ))">Lehman Brothers Holdings Inc.sparked a global share-market slump that helped the Nikkei 225 Stock Average fall a record 42 percent in 2008. The average has extended those losses by 11 percent this year.

Japan’s central bank held 1.27 trillion yen in shares as of Jan. 31.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Keiko Ujikane in Tokyo at kujikane@bloomberg.net