LEAD: Takenaka welcomes proposed UFJ-Mitsubishi Tokyo merger.
(EDS: RECASTING WITH TAKENAKA'S COMMENTS)
Financial Services Minister Heizo Takenaka on Wednesday welcomed the UFJ banking group's proposal to merge with Mitsubishi Tokyo Financial Group Inc., saying it will contribute to Japan's economic recovery.
The two giant banking groups can ''help improve the Japanese economy by improving their respective managements,'' Takenaka told reporters.
Now that the Japanese economy ''must clear the last important mountain to push ahead with its balance sheet adjustment,'' the two groups are expected to make decisions that will contribute to the Japanese effort, Takenaka said.
Hiroshi Okuda, chairman of the influential Japan Business Federation (Nippon Keidanren), told reporters ''it is good'' for the business community to have a strong bank.
Meanwhile, Sumitomo Trust & Banking Co., whose earlier agreement with the UFJ group to purchase UFJ Trust Bank may be nullified if the merger plan materializes, said it is mulling an appropriate reaction.
''We and the UFJ group signed a legally binding basic agreement on May 21 (on the purchase of UFJ Trust),'' Sumitomo Trust said in a statement. ''We are considering an appropriate response including legal action.''
Businesses in the central Japan region centering on Nagoya, where UFJ Holdings Inc. is headquartered, expressed concern the relationship between the regional economy and the banking group may fade.
Hiroji Ota, chairman of the Chubu Economic Federation, said, ''I hope that (UFJ Bank) will devote itself to its original operations of providing funds smoothly to companies in the region as the only city bank that is based in the region.''
Sokichi Minoura, chairman of the Nagoya Chamber of Commerce & Industry, said, ''Though I feel that (the merger) is inevitable, it is regretful'' if UFJ's role in the region becomes smaller.
Large borrowers from the UFJ group such as supermarket chain operator Daiei Inc. and Sojitz Holdings Corp., the holding firm of trading house Sojitz Corp., also expressed concern as the possible merger may force them to review restructuring plans they are implementing.
An official from one of the borrowers said, ''I have not received any notice from UFJ about reviewing plans in the future. Such a development is unexpected, and we have to steadily implement our plan.''
UFJ Holdings decided at an extraordinary board meeting Wednesday to propose merger negotiations with Mitsubishi Tokyo Financial Group, a deal that would create the world's largest banking group in terms of assets.
The combined group will hold total assets of 190 trillion yen, topping Mizuho Financial Group Inc.