(Updates with company plan to transfer part of its bad loans)
TOKYO, Nov 25 (Reuters) - The head of Japan's main business lobby, Hiroshi Okuda, said on Monday that the nation's banks need to go through restructuring in order to regain public confidence.
"Banks first should go through restructuring and this is one of the ways for the banks to regain confidence," Okuda, chairman of the Japan Business Federation, told a news conference.
Okuda, who is also chairman of Toyota Motor Corp , reiterated his denial of British newspaper reports earlier this month that quoted him as saying the government would be forced to nationalise at least one of the four biggest banks due to its tough reforms of the financial sector in a cleanup of bad loans.
He called the reports "groundless" and said what he told the newspapers was that two of the four megabanks were strong and the other two were weak.
He did not identify the banks he was referring to. These views were common among Japanese people, Okuda said.
Asked if Toyota would buy more shares in UFJ Holdings Inc , in which it already holds a nearly 10 percent stake, he said Toyota had not received any request.
Okuda said Toyota would consider the situation of the bank, itself and other factors before deciding on any request.
UFJ Bank, a core unit of UFJ Holdings, said earlier on Monday it planned to transfer one trillion yen ($8.13 billion) of bad loans to a group company to be set up in March to help clean up its problem debts.
The bank, widely seen as the weakest of the four biggest banks, said the new company would be part of UFJ Holdings, but a spokesman said it would seek an injection of about 100 billion yen from investors outside the group.
($1=123.04 Yen)