Big Japanese banks set for fresh merger

Ulhas Joglekar ulhasj at bom4.vsnl.net.in
Mon Mar 13 17:22:46 PST 2000


Tuesday 14 March 2000

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
|Disclaimer|
For comments and feedback send Email © Bennett, Coleman & Co. Ltd. 2000.



More information about the lbo-talk mailing list