Japanese Banks Agree to Merge Into World’s Largest
TOKYO (AP) _ Two of Japan’s largest banking companies, Mitsubishi Bank Ltd. and Bank of Tokyo Ltd., said today they agreed to a merger that would create the world’s biggest bank.
Terms of the deal were not announced. Japanese media reports indicated it would be a stock-swap merger between equals, with investors in the two firms receiving shares in the new company.
The combined banks would have $814 billion in assets, surpassing the current world leader, Japan’s Sumitomo Bank, which has $601 billion in assets.
Mitsubishi, Japan’s sixth-largest bank in terms of assets, is a power in domestic commercial banking, while No. 8 Bank of Tokyo has strong overseas operations and Japan’s leading foreign currency business.
``It’s a good combination,″ said Tsuneo Wakai, president of Mitsubishi Bank.
Bank of Tokyo president Tasaku Takagaki said Mitsubishi, ``has a strong base that can fill out the places where we are lacking.″
Wakai said details of the merger must be worked out between the two companies and with government regulators. He said the banks would seek to complete the merger by April 1996.
The new institution tentatively will be called Tokyo Mitsubishi Bank.
Japanese stock and bond prices soared in late trading today on reports that a deal was imminent. The banks initially denied the reports.
The 225-stock Nikkei index surged in the last hour to finish at 16,681.73, up 585.48 points, or 3.64 percent.
``These are two of the best Japanese banks,″ said Salomon Brothers banking analyst Alicia Ogawa, noting that neither is burdened with bad-debt loads of the magnitude that Japan’s other big banks are facing.
Lending activity, particularly for real-estate ventures, mushroomed in the mid-to-late-1980s, a period of extremely easy credit that helped create what is known as the ``bubble economy.″
Tokyo Mitsubishi Bank would have deposits of $589 billion. Japan’s Sakura Bank, itself the product of a 1990 merger between Mitsui and Taiyo Kobe banks, is the current leader in deposits at $433 billion.