Ashikaga Holdings Co. is considering merging with Joyo Bank Ltd., the latest regional lenders to weigh such a move as the slowing economy and shrinking population saps loan demand.
Nothing has been decided on any tie-up, the companies said in separate statements following a report by NHK that they are in final talks to combine. Joyo Bank said a merger is one of many options it's considering.
Officials have been urging local banks to consider merging to shore up profits weighed down by sluggish economic growth and declining interest rates. The privatization of Japan Post Bank Co., the nation's biggest holder of deposits, following an initial public offering this month may also add competition for the nation's 105 regional lenders.
Joyo Bank and Ashikaga may combine under a holding company by the middle of next year, creating the country's third-largest regional lender, NHK reported, without saying where it got the information.
The banks, which have about ¥15 trillion in combined assets, want to expand business in Tokyo, NHK said.
Joyo is based in Ibaraki Prefecture and Ashikaga is located in Tochigi Prefecture.
Bank of Yokohama Ltd. and Higashi-Nippon Bank Ltd. agreed last month to form a joint holding company. Kyushu Financial Group Inc. shares began trading this month following the merger of Kagoshima Bank Ltd. and Higo Bank Ltd.