Sakura Friend Securities Co. and Meiko National Securities Co. plan to merge in a bid to boost cost effectiveness amid continuing stock market woes, officials of the midsize securities firms said Wednesday.
The accord must be officially approved at shareholders' meetings in mid-January, they said.
The new company, yet to be named, is scheduled to begin operating on April 1.
The two firms said they need to restructure to remain profitable amid thinning trading volumes, adding they hope to enhance their operational cost efficiency by trimming overlapping administrative functions.
"We would like to build an earnings structure that produces profits and dividends in this negative market condition," said Yasuyoshi Sogo, president of Meiko National Securities Co.
The combined operational revenue of Sakura Friend, Japan's 10th largest securities firm, and Meiko National, the 11th largest, stood at 34.9 billion yen in 2001, which would make put new company in the No. 8 position.
Sumitomo Mitsui Banking Corp. and its group companies are the largest shareholders of both companies. Matsushita Electric Industrial Co. is also a major shareholder of Meiko National.