TOKYO, March 28 -- The Bank of Tokyo and Mitsubishi Bank are planning a merger that will make them the largest commercial bank in the world, news reports said Tuesday. The Nihon Keizai Shimbun said that the two banks had agreed in principle to the merger but will still need approval from the Ministry of Finance and the Fair Trade Commission. The Ministry of Finance would not immediately confirm the reports, Kyodo news service said. The banks did not acknowledge the agreement either. The new superbank that would result from the merger would have assets of 53 trillion yen ($602 billion), almost four times as large as America's biggest bank, Citibank. The merged bank would have 460 branches and employee 24,709 people. The merger may occur as early as the fall or as late as the spring, the Nikkei said. Analysts said the merger appeared to be motivated by a desire to combine Bank of Tokyo's strong international franchise with Mitsubishi's extensive domestic network. Mitsubishi has more than 300 outlets in Japan compared to only 37 for the Bank of Tokyo, which is a major foreign exchange dealer. 'The two banks would arguably be worth more together than singly,' said David Threadgold, a financial analyst at BZW Securities (Japan) Ltd. Analysts described both banks as strong and said that their corporate cultures were similar. 'Both are highly respectable, old established banks,' said Threadgold. 'There shouldn't be any great clashes of culture.' 'The two banks have relatively few scars from the collapse of the bubble economy (when asset values declined),' said Shunsuke Motani, an economist at Deutsch Bank Research.
The Tokyo stock market welcomed news of the merger, with the key Nikkei 225 stock average rising 3.64 percent. Some analysts speculated that Japanese financial authorities may have leaked news of the merger in order to prop up stock prices before the end of the fiscal year on March 31 to ensure financial institutions met international capital adequacy requirements and to boost tax revenues. There was no evidence of this. The business community also welcomed news of the merger, seeing it as helping to promote financial stability and contributing to a restructuring of the nation's financial system. David Snoddy, a financial industry analyst at Jardine Fleming Securities Ltd. said that the merger might be approved only if the new bank takes over the debts of some weaker financial institutions. A wave of mergers is unlikely to follow however, he said. The new bank, if the merger goes through, is expected to be called Tokyo Mitsubishi Bank.
