Tokyo Tomin Bank and Yachiyo Bank are considering launching integration talks, sources said Monday.
The two regional banks, based in Tokyo, will likely explore the benefits of forming a joint holding company that would control them as operating units, the sources said.
The deal would create the sixth-largest regional bank in the Kanto region, with combined deposits of around ¥4.4 trillion.
Tokyo Tomin and Yachiyo hope to beef up their profitability by expanding and improving operational efficiency, the sources said.
The two banks, listed on the first section of the Tokyo Stock Exchange, are expected to finalize the plan as early as fall and achieve the unification in fall 2014, the sources said.
The envisaged holding company may serve as a base for further consolidation, industry sources said.
The business environment for regional banks has been tough amid the sluggish birthrate and aging population and waning demand for corporate loans.
Tokyo Tomin and Yachiyo don’t have much overlap when it comes to service areas and customer bases, the sources said. Tokyo Tomin chiefly serves midsize companies in Tokyo. Yachiyo focuses on small companies and self-employed people in western Tokyo and Kanagawa Prefecture.
Their customers can already use each other’s automated teller machines without commission fees.
Tokyo Tomin was set up in 1951 with support from the Tokyo Metropolitan Government and the Tokyo Chamber of Commerce and Industry.
At the end of March, its reported deposits stood at about ¥2.361 trillion and its loans at ¥1.787 trillion.
Yachiyo Bank was converted to an ordinary bank from “shinkin” status in 1991. It took over Kokumin Bank, another regional that failed in 2000.
Yachiyo had around ¥2.057 trillion in deposits at the end of March and loans of ¥1.377 trillion.
Tokyo Tomin has 77 branches; Yachiyo has 84. Combined, they have around 1,640 employees.