TOKYO (Reuters) - Mitsubishi UFJ Financial is considering raising up to 1 trillion yen ($10.6 billion) in capital to strengthen its balance sheet, Japan’s business daily Nikkei reported on Sunday.

Japan’s top bank, which invested $9 billion in Morgan Stanley earlier this month, is aiming to boost its capital base by the end of current business year in March, the Nikkei reported without citing sources.
Although Japanese banks have been relatively unscathed in the credit crisis, the plunge in Japanese shares in the past few months is threatening their balance sheets as they hold a considerable amount of Japanese stocks.
Nikkei share average .N225 fell to a 5- year low on Friday, a fall of 32 percent since the end of September, on worries that Japanese corporate earnings would be hurt by a rise in the yen and a severe slowdown in the world economy.
MUFG appears to be considering a public offering of around 600 billion yen in ordinary shares but it may change or postpone the plan, depending on market conditions, the business daily also reported.
MUFG is looking to tap funds from foreign investors such as Middle Eastern investors and hedge funds.
In addition, the group is also considering to issue 100 to 300 billion yen in preferred securities to Japanese investors the bank has had traditionally strong ties with, such as Nippon Life Insurance and Meiji Yasuda Life Insurance, Nikkei reported.
Alarmed by the sharp fall in Japanese share prices, the government also last week prepared measures to enable capital injections to banks by using public funds.