Big Japanese banks set for fresh merger
By Kunio Inoue
TOKYO: Another huge merger among big Japanese banks seems to be in the
works, with Sanwa Bank Ltd looking set to join a planned tie-up between
Tokai Bank Ltd and Asahi Bank Ltd, creating the world's third-biggest
banking group by assets, local media reported on Monday.
The threesome would become Japan's second-largest bank with combined assets
of 103.7 trillion yen ($ 975.4 billion). Tokai and Asahi previously
announced they will establish a joint holding company this October.
Analysts said the addition of Sanwa, which the reports said could join them
as early as April next year, would be a good match because all three were
focusing on retail banking, but with complementary geographical bases. Sanwa
is based in Osaka, western Japan, Tokai in Nagoya, central Japan, and Asahi
in Tokyo.
"It would be a strategic fit," said Nozomu Kunishige, a senior analyst at
Lehman Brothers.
Local media reported that the three banks are expected to reach an agreement
and formally announce the merger within this week.
On Monday, Tokai and Asahi said they are considering the possibility of
other financial firms joining their merger. Sanwa Bank said nothing had been
decided.
Japan's banking sector is rapidly consolidating, creating mammoth banks.
The three-way merger in October of Dai-Ichi Kangyo Bank Ltd, Fuji Bank Ltd
and Industrial Bank of Japan Ltd will create the world's largest bank,
Mizuho Financial Group, with around 135 trillion yen ($ 1.27 trillion) in
assets.
The second largest will be the German banking giant to be created by the
merger announced last week of Deutsche Bank AG and Dresdner Bank, with
combined assets of $ 1.2 trillion, analysts say.
Two other major Japanese banks, Sumitomo Bank Ltd and Sakura Bank Ltd, with
99.6 trillion yen in combined assets, are expected to merge by April 2002.
The latest merger, if it comes about, would leave Bank of Tokyo-Mitsubishi
Ltd, currently Japan's largest bank with 68.12 trillion yen in assets,
virtually the only major bank not involved in the industry consolidation
over the past year.
Analysts are generally sceptical about the possibility of Tokyo Mitsubishi
seeking an alliance with the only other major Japanese bank outside the
consolidation drive, Daiwa Bank Ltd, because Daiwa is considered a
relatively small, regional bank rather than a money centre bank.
"Tokyo Mitsubishi would rather go it alone because it is efficient and
already big enough," said Kuishige of Lehman Brothers.
The Tokyo Stock Exchange suspended trading in the three banks' shares at
mid-afternoon pending clarification of the news reports.
When suspended, Sanwa Bank's shares were up 41 yen or 3.8 per cent at 1,129;
Tokai Bank's shares were up 30 yen or 4.8 per cent at 660; and Asahi Bank's
shares were up 26 yen or 4.3 per cent at 626. ($ 1=106.31 yen)(Reuters)
For reprint rights: Times Syndication Service
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