TOKYO, Jul 1 – Japanese lenders Shinsei and Aozora, which have been hit hard by the global financial crisis, announced on Wednesday a planned merger that would create the nation\’s sixth biggest commercial bank.
The two companies said in a joint statement that they had agreed to a merger of equals that is expected to take effect by October 2010.
They said that Norito Ikeda, a former banking executive who is now an advisor to management consultants A.T. Kearney K.K., would become president and chief executive of the combined group.
"The merger is expected to create an independent financial institution and a platform that will deliver long-term, stable and sustainable earnings, providing value to all stakeholders," the statement said.
The name of the enlarged bank has not yet been decided but the two lenders said that Shinsei would continue to exist while Aozora would be dissolved.
The banks, both backed by US investment funds, are struggling to find a niche in the face of a weak economy and financial markets as well as growing competition with larger rivals.
Shinsei, which is about one-third owned by US buyout firm JC Flowers & Co, has been hit hard by the global credit crunch and last year said it would sell its Tokyo headquarters for more than one billion dollars.
Aozora, which is roughly half owned by US investment fund Cerberus, has fallen deep into the red because of exposure to failed Wall Street giant Lehman Brothers, troubled auto finance giant GMAC and other bad investments.
The two lenders were bailed out with public money during Japan\’s 1990s banking crisis and later sold to private investors. Both remain part-owned by the Japanese government.