OSAKA — Daiwa Bank and Asahi Bank are in talks to merge by fall 2003, following their business integration in March under Daiwa Bank Holdings Inc., bank sources said Tuesday.

The banking group is expected to be renamed Risona, derived from a Japanese word meaning “ideal,” the sources said, adding that a formal announcement on the merger is expected later this week.

Earlier in the day, Daiwa Bank Holdings issued a brief statement saying it is studying ways of reorganizing its group banks, including Daiwa Bank and Asahi Bank, but no decision has been made.

The holding company said it will announce its new name as soon as it is decided. The name should reflect its status as a “super regional bank,” the company said.

The banking group hopes a merger of the two banks will help streamline operations and improve the handling of bad-debt problems, the sources said.

They said Daiwa Bank Holdings is studying overall reorganization of the group, which includes Kinki Osaka Bank and Nara Bank.

Daiwa Bank and Asahi Bank aim to have the merged bank spin off Asahi’s operations in Saitama Prefecture to create a separate bank, and to reorganize their operations in the Kansai region as well.

Details of those plans will be worked out by the end of July, the sources said.

The reorganization would result in a bank with broad operations covering Tokyo and Osaka, supplemented by regional operations.

Daiwa Bank and Asahi Bank initially aimed for a merger by next April. But after seeing the system malfunctions experienced by the Mizuho Financial Group, they are now targeting fall 2003 so they can be properly prepared, the sources said.

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