Mitsubishi bank units study management merger for 2001

The Bank of Tokyo-Mitsubishi and Mitsubishi Trust & Banking Corp. are studying a plan to unify their managements under a single holding company, the banks indicated Tuesday.

Nippon Trust Bank and Tokyo Trust Bank, both Bank of Tokyo-Mitsubishi subsidiaries, would also join the alliance, industry sources said, adding that the four banks envision integrating their management teams around spring 2001.

The integration would create the nation’s fourth largest and the world’s fifth largest banking group, with combined assets of 88 trillion yen. Japan’s third-largest group, a bank to be set up through the merger of Sumitomo Bank and Sakura Bank, will hold 99 trillion yen.

“It is true that various options are being considered between our banking group and Mitsubishi Trust,” the Bank of Tokyo-Mitsubishi said in a statement.

Mitsubishi Trust, meanwhile, said that nothing concrete has been decided.

Still in relatively good health following the bad-loan hangover that set in after Japan’s asset-inflated bubble economy collapsed in the early 1990s, both the Bank of Tokyo-Mitsubishi and Mitsubishi Trust have reportedly been wary of any proposal to integrate their operations.

Following an alliance frenzy started by other major banks last summer, however, the pair have apparently decided to overcome their reluctance, sources said.

Although initial news reports pushed up the stock prices of both banks, analysts reacted calmly to the reported plans.

“Four financial institutions in the Mitsubishi group (including the two banks and Meiji Life Insurance Co. and Tokio Marine & Fire Insurance Co.) have formed an alliance already,” said Katsuhito Sasajima, director and senior analyst of the equity research department at Warburg Dillon Read. “The reports did not cause me much surprise.”

Still, the union will compliment both, by letting the Bank of Tokyo-Mitsubishi use Mitsubishi Trust’s expertise in such growth areas as pension management and asset securitization, Sasajima said.

Mitsubishi Trust will also benefit from the alliance by gaining access to Bank of Tokyo-Mitsubishi’s branch networks, which outnumber its own outlets, he added.

But a potential catch is that their client bases overlap as both cater to Mitsubishi group-related clients, Sasajima said.

The move by the Mitsubishi group would more or less conclude the sector’s realignment frenzy set off last August by the three-way consolidation plan announced by Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan to form the world’s biggest banking entity — the Mizuho Financial Group.

That announcement was followed by the pairing of Sumitomo Bank and Sakura Bank in October, and by a three-way unification plan announced in March by Sanwa Bank, Tokai Bank and Asahi Bank.