Major Japan Banks Mull Alliance
TOKYO (AP) -- Two of Japan's largest banks said Saturday that they may form an alliance
in a key business area to cope with increased deregulation and bad loans.
Dai-Ichi Kangyo Bank Ltd. and Fuji Bank Ltd., among the ten largest banks in Japan, said
they are considering merging their trust banking operations. But they denied any plans for a full-scale merger.
The proposed venture, unusual in that it would link major banks from industrial groups with few traditional ties, would specialize
in asset-management, a field recently deregulated under Japan's program of opening financial markets to greater competition.
It comes as just the latest example of restructuring in Japan's ailing banking sector, which has been hurt by massive bad loans
and a prolonged slump in the overall economy.
On Friday, Mitsui (Nasdaq:MITSY - news) Trust and Banking Co. said it would close its overseas banking operations and
Sakura Bank Ltd., another core company of the Mitsui group, said it would slash 3,000 jobs, or 20 percent of its work force
within three years.
The link between Dai-Ichi Kangyo Bank and Fuji Bank would reportedly help strengthen troubled Fuji affiliate Yasuda Trust
and Banking Co. by providing an infusion of funds to the cash-strapped lender.
Under the deal, Yasuda Trust would sell its pension-management and securities-custody businesses to the new venture in return
for $1.72 billion in capital to write-off its non-performing loans, the Nihon Keizai newspaper reported, citing unidentified
sources.
Yasuda would also transfer its overseas operations to the venture, the report said.
Such a move would ease concern about the financial health of Japan's Fuyo industrial group, which is headed by Fuji Bank and
includes Yasuda Trust, Nissan Motor Co. (Nasdaq:NSANY - news) and trading house Marubeni Corp.
Separately, Fuji Bank on Friday denied a report of plans to sell its controlling stake in Heller Financial Inc. (NYSE:HF - news),
a U.S. commercial-finance subsidiary, to generate cash for writing off its own portfolio of bad loans.
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