Higo Bank and Kagoshima Bank are finalizing talks on a merger, officials said on Friday, amid broader realignment moves in the regional banking sector.
The combined assets of the two banks, based in Kumamoto and Kagoshima prefectures respectively, stand at more than ¥8.3 trillion, making them the country's ninth-biggest local banking group and the second-largest in Kyushu.
The government has increasingly pressed regional banks to adopt drastic measures to enhance competitiveness and sustain sector growth at a time when the population is aging and the domestic market is shrinking.
Earlier this week, it emerged that the Bank of Yokohama and Higashi-Nippon Bank, which is based in Tokyo, are in advanced talks on a merger that would create the nation's biggest regional banking group.