The prewar Mitsui "zaibatsu" conglomerate appears to be making a comeback after being outlawed for five decades as Sakura Bank and other financial institutions belonging to the Mitsui group of companies are contemplating forming a holding company.Financial industry sources said Friday that Mitsui Trust & Banking Co., Mitsui Mutual Life Insurance Co., Sakura Securities Co. and the subsidiaries of Sakura Bank are expected to initially come under the wing of the planned holding company.The establishment of the holding company has been proposed as a way of staving off an expected surge of competition among financial institutions as a result of the upcoming "Big Bang" financial deregulation by reducing the redundancy of similar operations and services offered by financial institutions within the same conglomerate, the sources said.Japan scrapped a 52-year-old ban on the formation of a financial holding company in December, provided the firm's total assets do not exceed 15 trillion yen. A financial holding company does nothing but hold shares in other companies and commands each corporate pyramid.The ban on zaibatsu was imposed in 1945 by the U.S. Occupation forces, who described the autocratic financial monarchies as the foundation of a militaristic, totalitarian nation. The assets of 15 zaibatsu were frozen and they were ordered to disband.Takuma Dan, the top manager of Mitsui Gomei Kaisha and also head of the predecessor of the Japan Federation of Economic Organizations (Keidanren), was assassinated in 1932 by a rightist group that considered Mitsui to be the cause of all Japan's problems at that time. The country was feeling the effects of the global Great Depression and Mitsui had been Japan's first zaibatsu, established by the Mitsui family in 1909.Sakura Bank was established in 1990 after the merger of Mitsui Bank -- the core firm in the former Mitsui zaibatsu -- and Taiyo-Kobe Bank. The emergence of the proposal inside the Mitsui group for the creation of a holding firm follows recent press reports that four financial institutions belonging to the Fuyo conglomerate of companies -- Fuji Bank, Yasuda Trust & Banking Co., Yasuda Fire & Marine Insurance Co. and Yasuda Mutual Life Insurance Co. -- have devised a plan to form a holding company.The Sakura Bank-based holding company will be the third major holding company, followed by one planned by Yasuda and one formed last month by the Daiei group. A reorganization of alliances among Japanese financial institutions may be accelerated now that the Mitsui and Yasuda groups, which were once zaibatsu conglomerates before World War II, are moving toward a greater integration, the industry sources said.Parallel with the move inside the Mitsui group, Sakura Bank, one of Japan's nine giant banks, is planning to amalgamate some of its overseas branch offices and reduce their numbers, the sources said. The bank also envisages realigning the locations of its domestic branch offices, as about one-fifth of its branches are concentrated in Hyogo Prefecture, they said.The bank wants to shut down some branches whose operations have been in the red or whose business turfs overlap those of other branch offices, they said. It is also examining the feasibility of putting some of its branches under the wing of a new bank that would be created by a merger with Hanshin Bank, a second-tier regional bank under Sakura's wing, they said.Meanwhile, Mitsui Trust & Banking is pondering whether to place greater emphasis on investment management of the pool of pension funds from customers who apply for its pension plans, while scaling back operations in other business fields, they said.Mitsui Marine & Fire Insurance Co. has made no decision on a proposal to join the proposed holding company, but wants to develop some ties with the new holding company as it will face greater competition from other nonlife insurers amid the financial deregulation, they said.
