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SAPPORO (Kyodo) Hokkaido Bank became a wholly owned subsidiary Wednesday of Hokugin Financial Group Inc., the holding company of Hokuriku Bank.

The financial group, based in the city of Toyama, also changed its name to Hokuhoku Financial Group Inc.

The Sapporo-based Hokkaido Bank and Hokuriku Bank retain their names to continue their operations under Hokuhoku Financial.

The move creates Japan’s second-largest regional banking group in terms of deposits, following Bank of Yokohama.

The integration of banks operating in different areas sets a rather unconventional example because regional banks tend to seek merger partners within their areas of operation.

Hokuriku Bank operates mainly in Toyama, Ishikawa and Fukui prefectures in the Hokuriku region, while Hokkaido Bank operates mainly in Hokkaido.

Hokuriku Bank President Shigeo Takagi became president of Hokuhoku Financial, while Hokkaido Bank head Yoshihiro Sekihachi assumed the post of vice president of the holding company.

Hokuhoku Financial, capitalized at 50 billion yen, had 321 branches and deposits totaling 8.29 trillion yen as of the end of March.

The two regional banks, which began cooperating on the operation of their automated teller machines in May 2002, agreed to merge in May last year. The merger follows orders issued by the Financial Services Agency in August 2003 to improve their businesses.

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