Japan to inject $1.2 billion into 3 regional banks

TOKYO (Reuters) - Japan's financial regulator said on Friday it would inject 121 billion yen ($1.2 billion) into three regional banks Sapporo Hokuyo Holdings Inc (8328.T), Minami-Nippon Bank (8554.FU) and Fukuho Bank Ltd.

Regional banks have been among the hardest hit as Japan falls deeper into recession, due partly to a spike in bankruptcies by smaller firms as export orders dry up in the midst of a global credit crunch.

The Japanese government launched a bank recapitalization scheme in December, aiming to inject capital into regional banks and keep loans flowing to the ailing small to medium-sized firms that form the core of their client base.

Japan said it would inject 100 billion yen into Sapporo Hokuyo, Japan's largest second-tier regional bank based in the northern island of Hokkaido, 15 billion yen in Minami-Nippon Bank and 6 billion yen in Fukuho.

Shares in Sapporo Hokuyo fell 3.5 percent to 222 yen after the announcement, and Minami-Nippon Bank dropped 1.8 percent to 270 yen. The benchmark Nikkei average .N225 gained 4.2 percent.

($1=97.49 Yen)

(Reporting by Yuzo Saeki and Mayumi Negishi; Editing by Edwina Gibbs and Rodney Joyce)