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Last Updated: Friday, 30 July, 2004, 05:37 GMT 06:37 UK
Japan bank merger battle heats up
Officials from banks UFJ and MTFG meet for talks on Friday
UFJ and Mitsubishi had hoped to seal a deal by the autumn
Japan's Sumitomo Mitsui Financial Group has unveiled plans to merge with ailing rival UFJ, potentially derailing an existing bid from Mitsubishi Tokyo.

The move casts doubt on the UFJ-Mitsubishi merger, a deal which would create the world's biggest bank.

Sumitomo's president, Yoshifumi Nishikawa, said the bank aimed to table a merger proposal later on Friday.

UFJ said it would continue to pursue a tie-up with Mitsubishi, but would weigh up Sumitomo's proposal.

Talks suspended

"We are willing to listen to what Sumitomo Mitsui has to say," a UFJ spokesman said.

A rival offer from Sumitomo has been on the cards since Tuesday, when the bank won a court order blocking merger discussions between UFJ and Mitsubishi.

Sumitomo argued that the proposed tie-up would breach an existing agreement it had with UFJ to buy its trust banking operations.

Mitsubishi and UFJ had originally hoped that their merger, which would create a combined group with 188.7 trillion yen ($1.7 trillion ; 0.9 trillion), would be complete by the autumn.

Osaka-based UFJ, the smallest of Japan's 'Big Four' banks, is keen to join forces with a larger rival.

Weighed down by bad loans, the bank crashed to loss of 402 billion yen in its most recent financial year, prompting the resignation of senior executives.




WATCH AND LISTEN
Seijiro Takeshita, Mizuho International
"This is a pleasant surprise for both UFJ and the regulators"



SEE ALSO:
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