Chuo Mitsui Trust and Banking Co. announced Friday it will reorganize its trust operations and seek capital injections of between 60 billion yen and 70 billion yen from other members of the Mitsui group.

"Strengthening our financial base is the first step toward future reorganizations or mergers," said Chuo Mitsui President Kiichiro Furusawa at a news conference.

In a bid to stay alive, Chuo Mitsui will divide its wholesale and retail trust operations by transferring its wholesale businesses to subsidiary Sakura Trust & Banking Co. before March.

The two trust banks will be united under a holding company, tentatively named Mitsui Trust Holdings.

Chuo Mitsui will also seek capital injections from members of the Mitsui group to raise its capital adequacy ratio -- a measure of a bank's financial stamina -- from 9 to 10 percent.

The hope is that Chuo Mitsui will become more attractive in the Japanese banking industry, which critics say needs to consolidate further to regain its global competitiveness.

"We want to strengthen our position as a bank specializing in trust business within the Mitsui Group," Furusawa said.

Hobbled by bad loans and stock losses, Chuo Mitsui has been struggling to create a viable restructuring plan that would ease market fears about its deteriorating capital base.

Chuo Mitsui announced the same day that it is drastically slashing its earnings projections to a net loss of 36 billion yen for the six months to Sept. 30. It had originally projected a 7 billion yen net profit.

This was after the bank set aside 63 billion yen for bad-loan writeoffs, up from an originally estimated 35 billion yen, and after it chalked up an estimated 340 billion yen in appraisal costs to cover stock market losses.

Chuo Mitsui's projected write-offs for the entire year will remain unchanged at 110 billion yen, Furusawa said.

Cost cuts are on the way, with the trust bank ready to close 52 of its 125 branches by March 2003.

Friday's announcement follows last month's denials by Sumitomo Mitsui Banking Corp. that it was considering consolidating its management with Chuo Mitsui.

Management is unlikely to take pay cuts, Furusawa said, as board members' salaries "are definitely not that high."