The Bank of Tokyo-Mitsubishi, currently the biggest bank in Japan, will strive to survive intensifying competition in the banking industry by utilizing its mostly upscale retail customer base and solid international networks, the future president of the bank said.

BTM Deputy President Shigemitsu Miki, who is to assume the bank’s presidency later this month, said in an interview Thursday that although domestic banks — which have settled into four major camps through megamerger announcements — rank high in the world in terms of size, they still face major challenges.

“(Japanese) banks lag behind overseas competitors in profitability and the quality of services offered to customers,” he said. “We need to focus on these areas from now on.”

Miki expressed confidence that his banking group — to be formed under a single holding company next April with Mitsubishi Trust & Banking Corp. — will survive, despite Thursday’s announcement that a planned megabank involving Sanwa Bank, Asahi Bank and Tokai Bank will scrap a management-integration plan agreed in March.

“We won’t have any problem,” Miki said about the BTM-Mitsubishi Trust integration. “In addition to having no problems, I think we will eventually move toward consolidating management with two other firms in the Mitsubishi financial group (Tokio Marine & Fire Insurance Co. and Meiji Life Insurance Co.)”

Since the tieup announcement in April, BTM officials have been calling on Tokio Marine and Meiji Life to join the planned holding company, but the two have been noncommittal.

Miki expressed continued hope that the alliance can be sealed, acknowledging that it will take some time for the insurers to join them.

Meiji Life needs to be demutualized, a process that will take years, and Tokio Marine is busy maintaining its position as the top nonlife insurer while the nonlife insurance sector goes through a merger frenzy, he said.

On the Mitsubishi banking group’s advantage over other megabanks, he said that his group has relatively affluent retail clients and strong international contacts.

“Of the domestic banks, I think we have the strongest networks both at home and abroad,” he said. “These networks are helpful for our client firms to expand overseas. Plus, over the past two years, other domestic banks that had faced a liquidity crisis scaled down their overseas operations, bringing more business to us.”

Commenting on bids by nonfinanciers such as Sony Corp. and Ito-Yokado Co. to set up banks, Miki said such moves are “very stimulating” and “welcomed,” but added that measures must be taken to prevent these new banks from collapsing because collecting deposits is a unique job that depends on integrity.

The BTM is playing a pivotal role in Ito-Yokado’s application for a banking license, brokering a negotiation between the major supermarket chain and regulatory authorities. Its assessment of the the new bank’s profitability, however, has raised concerns that threaten to prolong the application process.

Miki said his bank has told Ito-Yokado that the firm’s plan to only offer transactions and stay away from lending will not be sufficiently profitable, adding that this is why it is taking time for involved parties to agree on the vision of the new bank.

Ito-Yokado owns the convenience store chain Seven-Eleven, and plans to offer cash deposits and withdrawals by setting up ATMs in its approximately 8,000 outlets across the nation.

“We are giving strict, realistic advice to Ito-Yokado,” Miki said. “In general, we have suggested that the new bank will not financially stand unless it offers some kind of loans to individuals.”