Jan. 15 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, will book 288 billion yen ($3.2 billion) in charges on stock market investments, threatening to cause the lender’s first loss.

Mitsubishi UFJ will take the charge for the third quarter ended Dec. 31, the Tokyo-based bank said in a statement today. The company hasn’t revised its forecast for a 220 billion yen full-year profit, spokesman Tsutomu Wakui said.

Mitsubishi UFJ has announced plans to raise 790 billion yen to shore up its balance sheet as bad loans rise and tumbling stock markets erode the value of its investments. Rivals Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. may follow suit in booking securities losses after the Nikkei 225 Stock Average slid 21 percent in the third quarter.

“It will be hard for Mitsubishi UFJ to make its full-year forecast if the Nikkei doesn’t recover before March 31,” said Kristine Li, a Tokyo-based analyst at KBC Securities with a “hold” rating on the stock.

The charges for stock-related losses at Mitsubishi UFJ are almost four times the 75.3 billion yen booked the preceding six months. The company’s earnings plunged 64 percent in the fiscal first half to a record-low 92 billion yen.

“It’s likely that Mitsubishi UFJ will post a net loss for the third quarter,” said Keisuke Moriyama, an analyst at Nomura Holdings Inc. in Tokyo.

Banks Losses Continue

The bank fell 1.5 percent to 516 yen at the close of local trading today, before the announcement. The stock has slumped 48 percent during the past year, compared with a 44 percent decline in the 84-company Topix Banks Index.

The first weeks of 2009 have brought a new wave of losses to global financial companies, with Deutsche Bank AG, Germany’s biggest, reporting a record loss yesterday of about 4.8 billion euros ($6.3 billion) in the fourth quarter.

Citigroup Inc. Chief Executive Officer Vikram Pandit said this week he would cede control of the Smith Barney brokerage to Morgan Stanley as he fights to save the bank, while HSBC Holdings Plc fell to the lowest in 10 years in Hong Kong trading today on concern an earnings slump may force it to raise as much as $30 billion and cut its dividend in half.

Mitsubishi UFJ, created in the 2005 merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc., has almost 800 branches in Japan through its retail banking unit and 75 outlets overseas.

Raising Capital

The company continued to make acquisitions in 2008, even as the credit crisis deepened. Chief Executive Officer Nobuo Kuroyanagi completed a takeover of San Francisco-based UnionBanCal Corp. in September and a month later invested $9 billion in Morgan Stanley.

Mizuho and Sumitomo Mitsui have also announced plans to shore up capital. Financial firms worldwide are raising more than $938 billion to boost their balance sheets after reporting almost $1 trillion in credit losses and writedowns since the U.S. subprime-mortgage market imploded.

Mitsubishi UFJ’s capital-adequacy ratio, a measure of financial strength, should stay above 10 percent even if the benchmark Topix index falls to 750 from today’s closing level of 795.99, said Nomura’s Moriyama, who rates the stock a “buy.”

“The bank’s capital won’t face much of a problem, as it’s bolstering its capital base with new funds,” he said.

Credit-default swaps on the senior debt of Mitsubishi UFJ were quoted unchanged at 110 basis points at 6:07 p.m. in Tokyo, BNP Paribas SA prices show.

Cross-Shareholdings

Cross-shareholdings among Japanese companies are hurting their profits as stocks fall amid the global recession. NEC Corp., Japan’s largest personal-computer maker, reported 87.6 billion yen in valuation losses on its shareholdings on Jan. 6. JFE Holdings Inc., the world’s third-largest steelmaker, reported 60.1 billion yen in such charges on Jan 13.

Among Mitsubishi UFJ’s holdings are stakes in Nintendo Co., maker of the Wii video-game console, and Honda Motor Co., Japan’s second-largest carmaker. Nintendo dropped 22 percent in Tokyo trading in the third quarter, while Honda fell 38 percent.

Mitsubishi UFJ had 5.01 trillion yen in domestic shareholdings at the end of September, while Mizuho had 3.8 trillion yen in such investments, according to the companies. Sumitomo Mitsui had 2.8 trillion yen in stocks.

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

Last Updated: January 15, 2009 04:44 EST