Three Japan banks to set up 100 bln yen corp rehab fund - Nikkei

Japanese yen notes are piled atop U.S. dollar bills during a photo opportunity at an office of Interbank Inc. money exchange in Tokyo November 27, 2009.

REUTERS - Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp will partner with Development Bank of Japan to set up a corporate turnaround fund aiming to invest about 100 billion yen ($1.19 billion), the Nikkei said.

An ailing firm's main lenders often take the lead in spearheading its rehabilitation. The two banks and the state-backed Development Bank of Japan will pool their resources in the fund, which will then help companies back onto their feet, the business daily said.

Bank of Tokyo-Mitsubishi UFJ, a member of Mitsubishi UFJ Financial Group, and Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group, along with the Development Bank of Japan intend to set up the fund by this month end, the paper said.

The banks envision an investment period of three years, the business daily added.

The partners have signed on trading house Mitsubishi Corp to invest in their turnaround fund, which is slated to start with about 30 billion yen, the daily said.

The two banks will refer companies to which they serve as main banks, for turnaround investment in a range of several billions of yen to about 25 billion yen, the paper said.

The fund will recover its investment by selling its stakes in such firms, the business daily added.

(Reporting by Vaishnavi Bala in Bangalore; Editing by Roshni Menon)