Japan's major banks are expanding leveraged buyout financing to meet surging demand from record mergers and acquisitions while tightening risk controls after Marelli Holdings' 2022 failure, Nikkei reported Wednesday.

Mitsubishi UFJ Financial Group (TYO:8306) increased its LBO team by 20% to 60 staff, Mizuho Bank (TYO:8411) expanded to 90, and Sumitomo Mitsui Banking Corp. (TYO:8316) added 20% more personnel, according to the report.

Outstanding LBO loans by nine major banks totaled 6.6 trillion yen as of September 2023, more than double 2019 levels, the report said.

Funds such as Blackstone and EQT are driving big-ticket deals, with acquisitions of TechnoPro and Fujitec exceeding 400 billion yen each, according to the report.

After heavy losses from Marelli's restructuring, banks are focusing on stricter screening and monitoring even as they pursue higher-yielding LBO loans, the report said.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)