Nintendo is preparing for a potential ¥300 billion ($1.9 billion) share sale as key banking partners unwind longstanding cross-shareholdings, marking another milestone in Japan’s corporate governance transformation. The move, which could be finalized as soon as Friday, would involve stake sales by institutions including MUFG Bank and Bank of Kyoto, according to sources familiar with the matter.

The Kyoto-based gaming giant is also planning a share buyback, signaling a coordinated effort to manage market impact and stabilize valuation.

Strategic Stakes Under Pressure

The planned sale reflects a broader trend across Japan, where regulators and the Tokyo Stock Exchange have intensified calls for companies to unwind cross-shareholdings. These arrangements — in which firms hold shares in business partners to cement relationships — have historically shielded management from shareholder scrutiny.

As of September, Bank of Kyoto held a 4.19% stake in Nintendo, while MUFG Bank controlled 3.62% through a trust structure. Both banks have publicly committed to reducing such holdings as part of governance reforms aimed at improving capital efficiency and transparency.

A similar stake sale in 2019 totaled ¥71 billion, underscoring how significantly the current transaction would exceed prior divestments.

Governance Reform Meets Capital Discipline

Japan’s cross-shareholding model has long been criticized by foreign investors as dampening shareholder returns and weakening accountability. In recent years, corporate governance reforms have encouraged firms to improve return on equity, enhance disclosure standards, and prioritize capital allocation discipline.

For Nintendo, a buyback alongside the stake sale would help absorb supply, potentially offsetting dilution effects and supporting share price stability. The stock pared earlier gains but remained up 2.4%, suggesting investors view the development as largely constructive.

Kyoto Financial Group’s shares surged 9%, reflecting the positive capital implications of monetizing a high-value holding.

Market Implications and Strategic Significance

At roughly $1.9 billion, the transaction represents one of the more notable cross-shareholding unwindings in Japan’s gaming and financial sectors. It highlights how even globally recognized franchises like Nintendo are not immune to domestic governance reform momentum.

Beyond immediate price effects, the move reinforces a broader shift in Japanese corporate behavior: from relationship-driven equity ties toward market-oriented capital management. As more institutions reduce legacy holdings, liquidity and shareholder activism may increase across Japan’s equity markets.

Investors will now watch the structure and timing of Nintendo’s buyback, as well as whether additional strategic holders follow suit.