The government said last Saturday it would take over Ashikaga, a lender that was unable to repay its debt. The takeover underscored Japan's effort to restore the health of the nation's financial industry.
"Long-term, it is a good thing as further evidence that the problems of the financial system are being tackled," said Jeremy Hall, who helps manage about US$3.5 billion in Japanese equities at Henderson Global Investors Ltd in Tokyo.
Banks also lifted Australia's S&P/ASX 200 Index by 1.4 percent, its biggest weekly advance in eight. National Australia Bank Ltd, the country's biggest lender by assets, climbed 3.7 percent to A$29.99. Australia & New Zealand Banking Group Ltd, the nation's No. 3 lender, rose 2.6 percent to A$17.26.
The Reserve Bank of Australia on Wednesday raised its target for the overnight cash rate a quarter percentage point to 5.25 percent. Interest rates at these levels still had a "stimulatory effect" on the economy, which had "strengthened considerably," the central bank said.
"There's still underlying growth in the economy," said Hans Kunnen, who helps manage US$56 billion at Sydney-based Colonial First State Investments, the biggest fund manager in Australia. The comments indicate "a stronger financial system," which is positive for banks.
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