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Japanese bank giant created
Three Japanese finance giants are to merge to create the world's third largest bank.
Sanwa, Tokai and Asahi announced on Tuesday the move which follows recent banking mergers in the UK and Germany.
Sanwa, Tokai and Asahi announced on Tuesday the move which follows recent banking mergers in the UK and Germany.
World's biggest banks (by assets) |
Fuji/DKB/IBJ: $1,048bn*
Deutsche/Dresdner: $1,200bn*
Sanwa/Asahi/Tokai: $1,055bn*
Sumitomo-Sakura: $968bn*
Bank of Tokyo-Mitsubishi: $691bn
BNP Paribas: $673bn
Citigroup: $668bn
Bank of America: $617bn
UBS: $564bn
HypoVereinsbank: $543bn
*pending
|
The three banks said they will set up a joint holding company in April next year.
They will have combined assets of about Y106.6 trillion ($1000bn) to become the second largest Japanese bank, and the third largest in the world.
The three banks currently have a combined 37,435 employees and 1,005 domestic branches.
Increasing competition
There has been a wave of consolidation in the Japanese banking industry, which has been saddled with billions of dollars in irrecoverable loans from a speculative lending boom in the late 1980s and early 1990s.
The triple merger was praised by Prime Minister Keizo Obuchi: "Realignment moves among financial institutions, such as mergers and partnerships, are to be welcomed."
By combining their operations, Sanwa, Tokai and Asahi would be able to increase their sources of revenue and fight off increasing competition as Japan deregulates its financial sector, analysts said.
Among Japanese banks, only the Mizuho Financial Group - to be formed out of the merger of Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan - would be larger.
Current presidents of the three banks will become co-chief executive officers of the new entity, which will be headquartered in Tokyo.
The name of the holding company will be decided later, the three banks said.
The three banks said they plan to conduct more drastic restructuring steps than those currently projected under business plans submitted separately to the government in March 1999 in return for public funds.
Doubts over plan
But some analysts have questioned the wisdom of merging three weak banks.
Sanwa, based in Osaka rather than Tokyo, has long been seeking a merger partner.
Shares in Sanwa plunged 7% on the Tokyo Stock Market on fears that there was little scope for cost-cutting in the retail branches of the three banks.
"Profitability will remain fairly low unless they really get very radical indeed," commented Brian Waterhouse of HSBC Securities.
Others questioned whether the holding company structure, rather than a full merger, would yield the maximum benefits of restructuring.
But Dai-Ichi Kangyo bank president Katsuyuki Sugita, whose bank is following a similar path, said a holding company was better.
"If three banks of this size were to merge outright it would create a huge elephant that could end up stepping on its left foot with its right," he said.
They will have combined assets of about Y106.6 trillion ($1000bn) to become the second largest Japanese bank, and the third largest in the world.
The three banks currently have a combined 37,435 employees and 1,005 domestic branches.
Increasing competition
There has been a wave of consolidation in the Japanese banking industry, which has been saddled with billions of dollars in irrecoverable loans from a speculative lending boom in the late 1980s and early 1990s.
The triple merger was praised by Prime Minister Keizo Obuchi: "Realignment moves among financial institutions, such as mergers and partnerships, are to be welcomed."
By combining their operations, Sanwa, Tokai and Asahi would be able to increase their sources of revenue and fight off increasing competition as Japan deregulates its financial sector, analysts said.
Among Japanese banks, only the Mizuho Financial Group - to be formed out of the merger of Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan - would be larger.
Current presidents of the three banks will become co-chief executive officers of the new entity, which will be headquartered in Tokyo.
The name of the holding company will be decided later, the three banks said.
The three banks said they plan to conduct more drastic restructuring steps than those currently projected under business plans submitted separately to the government in March 1999 in return for public funds.
Doubts over plan
But some analysts have questioned the wisdom of merging three weak banks.
Sanwa, based in Osaka rather than Tokyo, has long been seeking a merger partner.
Shares in Sanwa plunged 7% on the Tokyo Stock Market on fears that there was little scope for cost-cutting in the retail branches of the three banks.
"Profitability will remain fairly low unless they really get very radical indeed," commented Brian Waterhouse of HSBC Securities.
Others questioned whether the holding company structure, rather than a full merger, would yield the maximum benefits of restructuring.
But Dai-Ichi Kangyo bank president Katsuyuki Sugita, whose bank is following a similar path, said a holding company was better.
"If three banks of this size were to merge outright it would create a huge elephant that could end up stepping on its left foot with its right," he said.
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