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Japanese banks unite for strength

JAPAN'S Shinsei Bank Ltd and Aozora Bank Ltd - two money-losing mid-sized lenders with major United States stakeholders - had agreed to merge, the firms said yesterday.

The combined entity will be Japan's sixth-largest bank with assets of about 18 trillion yen (US$186 billion), they said in a joint statement.

US private equity firm J.C. Flowers & Co holds a 33 percent stake in Shinsei, while Cerberus Capital Management LP owns more than half of Aozora.

"As the business environment in Japan has rapidly evolved, it has become imperative for financial institutions to improve competitiveness by attaining sufficient scale and by strengthening their capital bases," the banks said.

The merger will become effective in October 2010. The merger ratio is set at one to one, with Shinsei as the surviving entity. That means investors will receive one share of Shinsei stock in exchange for each Aozora share owned.

Norito Ikeda, a former president of Ashikaga Bank, will serve as the yet-unnamed bank's first president.


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