Japan Regional Lender Ashikaga and Joyo Bank to Merge

The more than 100 of Japan's regional banks got the public's attention over the past year. It's because of the expectations of mergers and acquisitions, as regulators presume them to reach with long-term strategies to deal with declining markets. Ashikaga and Joyo Bank are in a discussion regarding the merger.

Ashikaga Holdings Co Ltd and Joyo Bank Ltd were already on talks about merging. The agreement between the two Japanese banks would make the country's third-largest regional lender by assets as the industry is dealing with depressing growth prospects, according to the Monday report of Reuters.

Ashikaga is one-third owned by Nomura Holdings Co, and Joyo Bank is both based on Tokyo borders. The fusion would produce a bank with ¥15.2 trillion ($125.6 billion) in assets.

Differently, larger banks like the Mitsubishi UFJ Financial Group Inc. which counts on overseas business to cope up for tepid growth in domestic operations, regional banks are tied to fortunes of their local economies - being squeezed by a fast ageing population in Japan.

Officials are persuading local banks to consider collaboration to brace profits weighed down by lagging economic progress and shrinking interest rates. Japan Post Bank Co's privatization, nation's biggest deposit holder, following an initial public offering this month may also add competency for the nation's 105 regional lenders, as reported by Japan Times.

No decision has been made yet on any tie-up according to the companies said in separate statements following a report by NHK that they are in final talks to combine. Joyo Bank informed that a merger is one of many options it's considering.

On Tuesday, Ashikaga rose as much as 9.4% to 556 yen in Tokyo and traded at 553 yen as of 9:51 am local time. Joyo Bank increased as much as 2.3%, Bloomberg reported.

Last month, the Bank of Yokohama Ltd. And Higashi-Nippon Bank Ltd. coincides to create a joint holding company. Kyushu Financial Group Inc. shares started trading this month imitating the merger between Kagoshima Bank Ltd. and Higo Bank Ltd.