Business / Corporate

Japan’s FTC mulls approval of precedent-setting merger of Nagasaki regional banks

JIJI

The Fair Trade Commission is considering approving a long-discussed merger plan involving regional banks in Nagasaki Prefecture, according to informed sources.

The plan involves Fukuoka Financial Group Inc., the parent of Sasebo-based Shinwa Bank, and Eighteenth Bank, based in the city of Nagasaki.

In a proposal presented to the FTC on Tuesday, Fukuoka Financial and Eighteenth Bank said they will transfer loan claims totaling some ¥100 billion to other financial institutions in order to lower its share of lending in the prefecture, which would rise after the merger.

It would become the first loan claim transfer for a bank merger in Japan, a move likely to affect future mergers of regional banks in the country.

The proposal also includes introducing a system that will let a third party check lending rates.

Fukuoka Financial and Eighteenth Bank now plan to merge in April next year.

They reached a merger agreement in February 2016. The FTC has not approved the merger out of concerns that their share of loans will reach as high as some 70 percent in the prefecture after the merger, possibly prompting the merged lender to raise lending rates on small companies because of its dominant position.

Fukuoka Financial and Eighteenth Bank initially aimed to merge in April 2017, but have put off the move indefinitely due to the FTC’s stance.