Another Japanese megabank is in the making. Sumitomo Bank and Sakura Bank have just agreed to merge by April 2002, which will create the world's second-largest banking group, with assets of about 99 trillion yen. Earlier this year, Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan announced a tieup deal that will make them the world's largest financial conglomerate.
The significance of the Sumitomo-Sakura deal is that it cuts across traditional zaibatsu borders. Sumitomo Bank, of course, is the main bank for Sumitomo group companies, while Sakura Bank, formerly Mitsui Bank, serves the Mitsui group. This tieup highlights the fundamental changes that Japan's banking industry is now undergoing.
With financial institutions scrambling for cover amid the Big Bang of financial deregulation, it is certain that the planned merger between Sumitomo and Sakura will add fuel to realignments in the private financial sector, involving not just banks but other finance houses, such as brokerages and insurers.