Bank of Yokohama to Merge With Higashi-Nippon in 2016

Bank of Yokohama Ltd. agreed to merge with Higashi-Nippon Bank Ltd., the second such move by Japanese regional lenders this week in an industry battling a shrinking population and declining interest rates.

The banks plan to combine in April 2016, they said in a statement to the Tokyo Stock Exchange today. The companies haven’t decided the merger ratio.

Japanese officials have been urging local banks to consider combining to bolster profits as rural communities stagnate and unprecedented monetary easing narrows interest margins on loans. Kagoshima Bank Ltd. and Higo Bank Ltd., based on the southern island of Kyushu, said on Nov. 10 that they plan to merge next year to tackle intensifying competition.

“Consolidation is one of the options companies can consider to retain or strengthen their competitiveness,” Japanese Bankers Association Chairman Nobuyuki Hirano said at a news briefing this week. “This is something that bank managers need to decide to deal with such difficult circumstances.”

Bank of Yokohama and Higashi-Nippon cited the shrinking and aging population, intensifying competition and narrowing loan margins as reasons for the tieup. They will delist and form a publicly traded holding company, according to the statement.

Bank of Yokohama, based in the port city near Tokyo, is Japan’s second-largest regional lender, with 13.7 trillion yen in assets. Tokyo-based Higashi-Nippon Bank has 2 trillion yen of assets.

The number of local lenders in Japan has fallen to 105 from a postwar peak of 135 in 1972, according to the bank association.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE