Daiwa Bank Holdings Inc. will make Asahi Bank a wholly owned subsidiary on March 1 through a share-swap scheme, the banks announced Tuesday.

Under the plan, one Asahi common share will be exchanged for one Daiwa Holdings common share in the management integration of the banks, they said in a statement.

Tokyo-based Asahi and Osaka-based Daiwa announced Sept. 21 they had agreed to integrate banking operations to form the nation's fifth-largest banking group, with 50.4 trillion yen in combined assets.

Daiwa Holdings was formed Dec. 12 through the integration of Osaka-based Daiwa Bank and regional lenders Kinki Osaka Bank and Nara Bank.

The postintegration Daiwa Holdings will have capital of 720 billion yen, with Asahi transferring 340 billion yen in combined common stocks and preferred stocks to Daiwa, they said.

Under the latest agreement, Daiwa Holdings will pay "special share-swap allowances" to Asahi shareholders in lieu of a usual full-year stock dividend within four months of the date of the swap, they said.

Under the deal, Daiwa will pay 1.5 yen in per-share special allowance to the holders of common stocks.

At the same time, Daiwa will pay per-preferred share allowances of 14.38 yen and 18.50 yen to the government, which bought the two types of preferred shares issued by Asahi Bank in March 1999, when it tried to replenish its depleted capital base.

The terms of the share-swap scheme are contingent on endorsement at meetings of Asahi shareholders, slated for late January, and a Daiwa meeting to be held in February. Daiwa Holdings President Yasuhisa Katsuta will retain the presidency after the planned integration, with Asahi Bank President Yukio Yanase assuming the vice presidency.

Asahi will send Yanase and four other senior officials to the planned 13-member board of Daiwa Holdings.

The two banks earlier called their integration a "super regional bank," combining Asahi's base in the Tokyo metropolitan area with Daiwa's in the Kansai region.

The share prices of the two banks have been under heavy downward pressure in recent weeks as anxieties about the health of the banking system have deepened with the failures of many corporate borrowers causing large loan losses to banks.

Asahi and Daiwa have said they will scrap by the end of March 2006 a combined 138 branches considered redundant due to a doubling up of outlets. The streamlining will involve about 6,300 job losses, they said.