Sumitomo Bank and Sakura Bank have agreed to move up their planned merger by one year to next April in a bid to stay competitive amid the rush of restructuring in Japan’s banking industry, the two banks announced Friday.
At a press conference, the two banks said that the Mitsui and Sumitomo groups plan to name the new company Sumitomo Mitsui Banking Corp. Sakura is a member of the Mitsui group of companies.
The surviving entity will be Sumitomo Bank. Sumitomo Bank President Yoshifumi Nishikawa, 61, will become president of the new bank, while Sakura Bank President Akishige Okada, 62, will become its chairman.
The two banks expect the plan to be approved at general stockholders meetings in June. It will involve swapping one Sumitomo share for 0.6 Sakura share.
The new bank will try to expand its retail business by promoting housing loans and sales of investment trusts, the two top executives said.
The bank will also expand ongoing efforts to establish low-cost channels for individuals through tieups with such companies as convenience store operators, they said.
In the corporate business sector, the presidents said the new bank will scale back lending-based operations. Instead, it will emphasize such highly profitable areas as loan syndication, loan securitization and structured finance, they said.
The bank will aim to slash operational costs by 13 percent — or 100 billion yen — by fiscal 2004, compared to Sumitomo and Sakura’s combined figure for fiscal 1998.
As a result, the new bank will aim to achieve a consolidated gross business profit of 1.15 trillion yen in fiscal 2004, up from the combined estimate of 750 billion yen for fiscal 1999.
In October, Sumitomo and Sakura announced they would merge by April 2002.
Financial analysts say advancing the merger date will create a more favorable impression in the stock market and improve the companies’ market valuations.
The change in the timing of the merger brings forward the reorganization of Japan’s banking sector, with the nation’s nine “city” banks reorganizing into four major banking groups.
Since the Sumitomo-Sakura merger announcement was made, two other banking groups — one involving Sanwa Bank, Tokai Bank and Asahi Bank, and the other Bank of Tokyo-Mitsubishi and Mitsubishi Trust & Banking Corp. — have announced mergers for April 2001.