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Banks Deny Merger Rumor, But Stocks Surge

March 28, 1995

TOKYO (AP) _ Stocks surged today amid reports two of Japan’s largest banks have agreed to merge, creating what would be the world’s biggest bank.

Officials at Mitsubishi Bank Ltd. and Bank of Tokyo Ltd. denied the reports, and officials at both Japan’s central bank and the Finance Ministry insisted they had not heard anything about it.

The Nikkei 225-stock index went as high as 16,652.07 from 16,400 in the minutes after Japan’s Kyodo News Service and NHK television reported that the banks would merge.

The index closed at 16,681.73, up 585.48 points, or 3.64 percent.

The Tokyo Stock Exchange suspended trading of both Mitsubishi Bank and Bank of Tokyo shares soon after the reports surfaced.

Bank of Tokyo stock ended the day at 1,400 yen ($15.56), up 10.7 percent, and Mistubishi Bank stock rose 8 percent to 2,150 yen ($23.89).

NHK, Japan’s public television network, reported that the merger was likely in April. Kyodo and the economic newspaper Nihon Keizai said the banks wanted to merge in the fall.

``The reports are totally unfounded,″ said Hideo Oshima, a spokesman for Mitubishi Bank. He said there were ``absolutely no″ negotiations between the two banks.

Bank of Tokyo spokesman Shiro Tsubota made a similar denial.

Mitsubishi is strong in commercial banking, while Bank of Tokyo is strong in overseas operations and is Japan’s leading foreign currency bank.

The two banks, if merged, would be the world’s largest, with assets of more than $808 billion and deposits of more than $516 billion.

After the merger, the new bank would have its headquarters at Mitsubishi’s head office in Tokyo and the Bank of Tokyo would be disbanded, Kyodo said, quoting anonymous sources.

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