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Shinsei, Aozora banks to announce merger Wednesday.

TOKYO, June 30 Kyodo

Shinsei Bank and Aozora Bank are expected to announce Wednesday that they plan to merge on Oct. 1, 2010 to create Japan's sixth-largest banking group, sources close to the matter said Tuesday.

The new bank will have Norito Ikeda, 61, former president of Ashikaga Bank, as its first president, the sources said. Under the leadership of Ikeda who headed the once-nationalized regional bank from 2003 to 2008, the two banks aim to strengthen domestic operations by utilizing networks with regional banks, they said.

Shinsei Bank and Aozora Bank incurred huge losses linked to their heavy investments overseas in fiscal 2008 that ended March 31, hit hard by the global financial crisis. They aim to turn around their business through the merger.

The two banks are owned chiefly by U.S. investment companies. J.C. Flowers & Co. owns 33 percent of Shinsei Bank's outstanding shares, while Cerberus Capital Management L.P. has a stake of over 50 percent in Aozora Bank in terms of voting rights.

The two banks were both temporarily brought under state control in 1998. Since they were once again brought largely under private ownership in 2000, they have been revamping their operations under the guidance of the U.S. shareholders and others.

Still, they have yet to pay back a total of 400 billion yen in public funds, and they are even considering applying for additional funds to strengthen the merged bank's financial standing.

Ikeda, a Kanagawa Prefecture native, joined the Bank of Yokohama in 1970 after graduating from Tohoku University, and later moved to Ashikaga Bank. Since September 2008 he has been a special adviser for U.S. consulting company A. T. Kearney.
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Comment:Shinsei, Aozora banks to announce merger Wednesday.
Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:Jul 6, 2009
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