Japanese Banks to Divest Strategic Shareholdings in Toyota Motor during Share Buybacks

Japan’s two largest banks, Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG), are reportedly set to offload their strategic shareholdings in Toyota Motor, worth a combined $8.5 billion.

Bloomberg News reported that the banks intend to take advantage of the automaker’s planned share buybacks.

The move marks a notable shift as MUFG and SMFG have expressed intentions to gradually reduce their cross-shareholdings over time. While the banks refrained from commenting on the specifics of the report, the divestment of Toyota shares underscores the growing influence of corporate governance reforms driven by government initiatives and the Tokyo Stock Exchange.

In Japan, the longstanding practice of cross-shareholdings has been criticized for insulating management from activist or hostile shareholder pressures. The implementation of the governance code now mandates companies to regularly evaluate the appropriateness of maintaining cross-shareholdings.

According to Bloomberg, the banks are expected to gradually sell off their stakes in Toyota over the span of several years. Toyota, on the other hand, has not provided an immediate response to inquiries regarding the banks’ divestment plans.

Last month, Japan’s leading automaker announced its intention to repurchase up to 410 million shares valued at 1 trillion yen ($6.4 billion) by the conclusion of April 2025. Following the news of the impending divestment, Toyota’s shares experienced a 2.0% decrease in afternoon trading, while the banking institutions’ shares exhibited minimal reaction.