Japanese banks are selling their stake in the company behind Super Mario. Nintendo's $2.2 billion share offering is not just one firm's capital policy; it is a sign that Japan's decades-old system of corporate alliances, built on mutual stock ownership, is unraveling.

Nintendo Approves Up to $2.2 Billion Cross-Shareholding Unwind

On February 27, 2026, Nintendo's board of directors approved a massive secondary share offering. Four institutional shareholders, the Bank of Kyoto, Nomura Trust and Banking (managing MUFG Bank's pension trust shares), Resona Bank, and mobile gaming partner DeNA, will sell a combined 32.7 million shares. Including an overallotment option of up to 4.9 million additional shares, the total deal could be worth as much as ¥338.2 billion (approximately $2.2 billion) based on the day's closing price of ¥8,995.

The breakdown of shares being sold:

  • Nomura Trust and Banking (MUFG Bank pension trust): 16.15 million shares
  • Bank of Kyoto: 10 million shares
  • DeNA: 6 million shares
  • Resona Bank: 548,000 shares

Nomura Securities and Mitsubishi UFJ Morgan Stanley are among the lead underwriters. The shares were marketed primarily to domestic retail investors, with a portion allocated to overseas institutions. All four sellers agreed to a lockup barring further sales until 180 days after settlement.

Buyback and Cancellation to Cushion Market Impact

Anticipating the supply-demand impact, Nintendo simultaneously announced a buyback of up to 14 million shares or ¥100 billion ($660 million), whichever came first, to be executed on March 3–4 through the ToSTNeT-3 off-auction system with all acquired shares retired on March 31. It was Nintendo's first buyback in roughly four years.

Analyst Hideki Yasuda of Toyo Securities noted that pairing the offering with repurchases could limit the impact on market liquidity. Nintendo shares rose 3% on February 27, the day Reuters broke the story. But on March 2, the first session after the formal disclosure, the stock fell back on supply-overhang concerns. The market's verdict was not unanimous.

Cross-Shareholding, a Japanese Peculiarity

The practice at issue is seisaku hoyū kabushiki (政策保有株式), usually rendered as "strategic shareholdings" or "cross-shareholdings."

In Japan, companies have historically held shares in each other, not for investment returns, but to cement business relationships, ensure stable management, and defend against hostile takeovers. A bank would own shares in a manufacturer, and that manufacturer would bank with them. This web of mutual ownership created an implicit understanding: "You don't criticize my management, and I won't criticize yours."

During Japan's post-war boom, this arrangement delivered stability. Critics, foreign investors and governance specialists above all, have long argued the costs outweigh it:

  • Poor capital efficiency: Companies sit on low-return assets instead of deploying capital productively
  • Weakened governance: "Silent shareholders" don't hold management accountable
  • Neglect of shareholder interests: Protected by friendly shareholders, management tends to prioritize the status quo over value creation

The practice is largely absent in Western markets, where shareholders expect returns and hold boards to account through voting and engagement.

Why the Unwind Is Accelerating Now

The dismantling did not happen overnight. Several forces converged after 2023 to turn a gradual trend into a rush.

Corporate Governance Code (2015–2021)

The Tokyo Stock Exchange introduced the Corporate Governance Code in 2015, revised in 2021 to require disclosure of the purpose, value, and verified rationale for each strategic shareholding. Holdings that cannot be justified are left exposed to selling pressure.

TSE Market Restructuring & "Capital-Conscious Management" (2022–2023)

In April 2022, the TSE reorganized into three tiers, Prime, Standard, and Growth, with the Prime Market held to stricter free-float standards. In March 2023 it asked every listed company to pursue "management that is conscious of capital costs and stock price," and told those trading below a price-to-book ratio (PBR) of 1.0 to publish improvement plans. Because cross-held shares are excluded from the free-float calculation, the restructuring made holding them costly in itself.

The Insurance Scandal Trigger (Late 2023–2024)

In late 2023, a price-fixing scandal among major Japanese insurers drew business improvement orders from the Financial Services Agency. Regulators framed cross-shareholding as the source of the coziness that made the collusion possible. The three big insurance groups, Tokio Marine, SOMPO, and MS&AD, then said they would cut strategic shareholdings to zero by around fiscal 2030, a combined divestiture of over $40 billion.

The cumulative effect: securities reports filed in 2025 showed a record ¥9.77 trillion (about $64.5 billion) in strategic shareholdings sold, up 50% year on year and a second straight record. Financial institutions accounted for nearly half.

Toyota's $19 Billion Unwind: A "Watershed Moment"

One day before Nintendo's announcement, Reuters broke a larger story. Toyota is planning an accelerated unwinding in which banks and insurers sell roughly ¥3 trillion ($19 billion) of its shares, a figure that could grow depending on how shareholders respond.

Toyota's major shareholders include Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group, and MS&AD Insurance Group. The automaker is aiming to settle the matter in one go, absorbing the shares through buybacks, with a secondary offering held in reserve.

It would be among the largest cross-shareholding unwinds in Japanese corporate history. When the world's biggest automaker moves, the pressure on everyone else changes shape.

Large offerings kept coming through 2026. In February, eight financial institutions including MUFG Bank and Sompo Japan sold Shin-Etsu Chemical shares worth about ¥130 billion ($860 million). Ibiden and Nichirei announced offerings in the tens of billions of yen.

How Foreign Investors Are Responding

International investors are the biggest cheerleaders for Japan's cross-shareholding reform.

Foreign ownership of Japanese listed shares hit a record 32.4% in fiscal 2024. In the 1990s, domestic financial institutions were the dominant holders; that has fully reversed. Foreign investors also account for more than half of trading value on the Tokyo Stock Exchange, which makes them the decisive force in price formation.

These investors favor companies with high ROE (return on equity) and PBR (price-to-book ratio). Unwinding cross-shareholdings shrinks the equity base that sits in the denominator, so it lifts both directly. The Nikkei 225 hit a 34-year high in February 2024, and the gains that followed were widely attributed to expectations around governance reform.

The International Corporate Governance Network (ICGN) has nevertheless judged that Japan's progress is more formal than substantive so far. Independent outside directors still make up only about a third of Prime Market boards, against a majority in the U.S. and Europe, and independent board chairs remain rare. That is where the gap with Western markets, Singapore, and South Korea shows.

What This Means for Nintendo

For Nintendo, the offering rearranges the shareholder register. The Bank of Kyoto, a regional lender headquartered in the same city, held a 4.19% stake as third-largest shareholder, a relationship that symbolized Nintendo's roots in Kyoto's business community.

A previous offering in 2019 was worth about ¥71 billion ($470 million); this one is roughly five times larger. DeNA, which entered a capital and business alliance with Nintendo in 2015 to build smartphone games, is selling 6 million shares worth about ¥54 billion, a shift from capital-backed to purely commercial partnership. DeNA separately announced a buyback of up to 25 million shares, or ¥50 billion, of its own.

The Quiet Revolution Rolls On

TSE reform demands, foreign investor pressure, and the rise of activist shareholders all point the same way, and Japan is dismantling a system that once defined its economic identity. For international investors that means a more transparent, accountable, investable market. For Japan, the open question is what replaces the stability those long-term corporate relationships used to supply.

Does your country have a similar practice of companies holding shares in each other? Or are shareholders strictly return-seeking? What do you think about Japan unwinding these decades-old corporate ties? Let us know in the comments!

Update: Nintendo's offering price was set on March 9, 2026 at ¥8,347 per share, a 3.01% discount to that day's ¥8,606 close, with subscriptions on March 10–11 and settlement on March 16. The buyback was executed in the March 3 off-auction session at 11.43 million shares for ¥99.9 billion, and those shares were retired on March 31 as planned. Toyota group companies sold ¥935.3 billion of strategic shareholdings in the fiscal year ended March 2026, cutting the number of holdings to 94, a third of the level four years earlier. (As of August 2026)

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