Two more major Japanese banks are merging in a deal
that would create Japan's third biggest financial group and extend
the consolidation in the struggling financial sector here.
The Bank of Tokyo-Mitsubishi Ltd. and Mitsubishi Trust & Banking
Corp. said today they were combining to create a banking company
with about $857 billion in assets.
The banks have yet to work out terms and specifics, such as any
work force cuts, but they will integrate their operations under a
joint holding company, tentatively named Mitsubishi Tokyo Financial
Group, by April 2001.
Bank management hopes the merger will allow each institution to
benefit from the other's strengths: the branch network and customer
base of BOT-Mitsubishi and the asset management expertise of
The banks said they also hope to cooperate in growth businesses
such as private banking, pension management, and electronic
Japan's banks are consolidating to become more competitive in
the global economy as the government loosens regulation at home.
The financial industry is trying to recover from billions of
dollars in bad loans made in the speculative lending boom of the
The risks of the industry's merger strategy range from the
gigantic task of merging computer systems to communicating changes
to customers, analysts said.
If banks bog down in the process, they could miss in their aim
of improving productivity and efficiency, ING Barings analyst James
"Major bank management may be more overwhelmed by the task of
actual physical integration over the next few years, while other
firms steal market share in the financial sector," Fiorillo said.
With the liberalization of the industry, everyone from a
supermarket chain to electronics giant Sony Corp. is moving into
The biggest of the recent string of mergers is the Mizuho
Financial Group, which announced in August it was creating an
institution with around $1.4 trillion in assets by merging Dai-Ichi
Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan.
Japan's Sanwa Bank, Tokai Bank and Asahi Bank also plan to
merge, creating the country's second-largest bank with $1 trillion