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Wednesday, 1st July 2009
In Business In Japan,

Japanese banks agree to merger deal

Two of Japan's struggling banks have agreed to a merger deal which will create the country's sixth largest bank.

Shinsei Bank and Aozora Bank, both of which were created during the 1990s banking crisis when the government nationalised their predecessors, have been badly affected by the impact of the latest recession in Japan.

Aozora posted a loss of 243 billion yen (£1.5 billion) in the last financial year, with Shinsei recording a 143 billion yen deficit.

A name has yet to be decided for the new bank that will be created when the companies complete their merger in October 2010.

The banks said in a statement: "As the business environment in Japan has rapidly evolved, it has become imperative for financial institutions to improve competitiveness by attaining sufficient scale and by strengthening their capital bases."

Earlier this week, it was announced that the recession-hit computer chip manufacturer Elpida is to become the first Japanese company to receive state capital assistance after securing a 160 billion yen bailout.

Written by Graham McPherson