Japan’ Aozora Bank, Shinsei To Merge

Published: 25-Jun-2009

The banks may allocate equal value to Shinsei and Aozora shares, as part of the merger agreement

Shinsei and Aozora, the Tokyo-based lenders, which were rescued by the Japanese government during the 1990’s Nikkei bubble, are in talks to create nation’s banking behemoth with about $188 billion assets, reported Bloomberg.

However, industry sources are of the opinion that a merger may not be beneficial to both the banks, as they suffer relatively unstable funding and have small retail networks.

Hiromichi Tsuyukubo, Hedge-fund Manager at Tokyo-based Myojo Asset Management, said: “There’s no benefit from a merger between Shinsei and Aozora, and I don’t see the meaning for their existence. The banks don’t have sales resources or large branch networks, so they can’t compete with the mega banks.”

Aozora Bank is controlled by New York-based private equity firm, Cerberus Capital Management, whereas Shinsei Bank is backed by billionaire Christopher Flowers.

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