Japan trusts catch merger fever
By Miki Shimogori
TOKYO: Alliance fever is spreading through Japan's debt-plagued finance
sector. A day after three Japanese banks unveiled a plan to create the
world's third-largest bank by assets, a newspaper reported on Wednesday four
Japanese trust banks are considering a tie-up to create the nation's biggest
trust bank by assets.
"A flurry of alliances involving major banks appears to be coming to an end
and the focus is now shifting to trust banks and smaller regional banks,"
said Akira Takai, senior banking analyst at Daiwa Institute of Research.
Although the four -- Sumitomo Trust & Banking Co , Daiwa Bank , Chuo Trust &
Banking Co and Mitsui Trust & Banking Co -- quickly denied the report,
analysts said a limited partnership would not be surprising.
In its report, the daily Mainichi Shimbun newspaper said total trust assets
of the four would total more than 100 trillion yen ($952 billion),
surpassing the nation's biggest trust bank Mitsubishi Trust & Banking Corp .
Sumitomo issued a one-line statement denying the deal. "There was a report
today that we will tie up with Daiwa Bank, Mitsui Trust and Chuo Trust in
the trust banking area, but that is not a fact." Other banks also issued
denials.
The report follows Tuesday's announcement of plans by Sanwa Bank , Asahi
Bank and Tokai Bank to set up a joint holding company in April 2001 and
consolidate operations a year later, creating Japan's second biggest bank.
Mitsui and Chuo are already set to merge on April 1, forming the new
Chuo-Mitsui Trust & Banking Co as part of a consolidation drive in Japan's
finance sector aimed at wiping away years of bad debts and confronting a new
era of intensified competition.
Analysts said the four trust banks could cooperate in limited trust banking
areas like "master trust" asset administration, but added that such a move
would not mean a consolidation of overall trust banking operations.
"It would not be surprising if they are to join hands in a limited asset
administration business. But it's hard to take the move as implying more
drastic consolidation that involves their overall trust banking operations,"
Takai at Daiwa said. In November, Daiwa Bank and Sumitomo Trust said they
had agreed to form an equally-owned 50 billion yen ($480 million) trust
bank, specialising in asset administration.
Mitsui Trust has recently expressed a desire to join in the Daiwa-Sumitomo
trust partnership, but it has stressed that there has not been any concrete
decision yet. "One thing which is not clear at the moment is the future of
Daiwa Bank. I had expected it would join in the Asahi-Tokai camp, but that
scenario changed backed to square one with the latest announcement of the
three-way merger," Takai said.
"With Daiwa's earnings' flow in better shape, I don't really think the bank
would be in a hurry to forge an alliance." Past speculation had centred on
Asahi Bank and Tokai inviting Daiwa Bank into their alliance.
Shares in all four banks were suspended on the Tokyo Stock Exchange in the
morning, but trading resumed after they issued denials. By 0520 GMT, shares
in Daiwa were down 1.07 percent at 278 yen. Chuo, Mitsui, and Sumitomo trust
banks also sagged, reflecting an overall weakish tone in the banking sector.
(Reuters)
For reprint rights: Times Syndication Service
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