June 15 (Bloomberg) -- Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, aims to raise as much as 923 billion yen ($9.4 billion) in the biggest share sale in Japan since 2001.

The bank may sell 235 million shares at 3,928 yen apiece, 3 percent less than today’s closing price, according to a statement today. The Tokyo-based company announced plans for the stock sale on May 28.

Sumitomo Mitsui is selling shares after agreeing last month to purchase Citigroup Inc.’s brokerage business in Japan for 545 billion yen. The bank and its two largest rivals have announced plans to raise more than 4.6 trillion yen since November as souring investments and bad loans forced them to book a combined loss of 1.22 trillion yen in the year ended March 31.

“We are subscribing to the SMFG share sale and think the potential for share appreciation is high,” said Hiromichi Tsuyukubo, a hedge-fund manager at Myojo Asset Management Japan Co. in Tokyo, which oversees about $100 million. “We expect first-quarter results for the banking sector to be good.”

Sumitomo Mitsui’s shares gained 8.9 percent since May 28, compared with a 6.3 percent increase in an index tracking 84 Japanese banks. The stock fell 6.9 percent in Tokyo trading today after Nikkei English News reported the bank may raise a greater-than-estimated 1 trillion yen from the transaction.

NTT DoCoMo

Japanese companies have raised 733 billion yen in equity and equity-linked sales so far in 2009 as financial markets thaw.

Sumitomo Mitsui expects to receive 879.8 billion yen from the share sale by June 22, after deducting fees, today’s statement said. It will dilute existing shareholders’ stakes by 30 percent, according to the bank.

Naoko Nemoto, an analyst at Standard & Poor’s in Tokyo, said the capital raising will help the company’s main banking unit maintain it’s A+ long-term credit rating.

Daiwa Securities SMBC Co. and Goldman Sachs Group Inc. will underwrite the transaction.

The sale would be the biggest in Japan since mobile-phone operator NTT DoCoMo Inc. raised 950 billion yen in 2001, according to data compiled by Bloomberg.

The bank’s acquisition of Citigroup’s Nikko Cordial Securities Inc. brokerage and the underwriting divisions of Nikko Citigroup Ltd. should contribute to profit in the second half of this fiscal year after the deal closes in October, Masayuki Oku, chairman of the banking group, said this month.

Mitsubishi UFJ Financial Group Inc., Japan’s largest bank, raised about 400 billion yen selling common shares at the end of last year, while Mizuho Financial Group Inc. said in May it may sell up to 600 billion yen of shares.

Japan’s three largest banks are forecasting a return to profit this year after last year’s losses.

To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

Last Updated: June 15, 2009 06:08 EDT