Japan's FTC approves merger of Fukuoka, Eighteenth Bank after long review (updated)
24/08/2018 10:42
* FTC approves merger after two-year review
* Banks agree to sell 100 bln yen worth of loans to rivals
* Banks will be monitored on rates after merger
(Adds details)
By Junko Fujita
TOKYO, Aug 24 (Reuters) - Japan's Fair Trade Commission
(FTC) said on Friday it had approved the merger of two small
regional banks after a lengthy review that had sparked a battle
between the antitrust watchdog and financial regulators.
Fukuoka Financial Group Inc 8354.T had announced plans in
2016 to buy Eighteenth Bank Ltd 8396.T and combine it with
Shinwa Bank, one of its units.
The FTC blocked the deal over concerns the newly-created
bank would control about 70 percent of the lending market in the
southern prefecture of Nagasaki.
However, the Financial Services Agency (FSA) had been
promoting consolidation among regional banks to help them
survive a shrinking population, particularly in rural areas.
The FTC approved the merger because the banks had agreed to
sell 100 billion yen ($905 million) worth of loans to their
rivals in order to reduce the market share, Masanori Fukamachi,
director for FTC's mergers and acquisitions division, told a
media briefing.
"Competition in the region will not be undermined if the
merged banks offload loans. That would help other banks to
boost their competitive pressure," he said, adding about 20
banks have agreed to buy the loans.
The new entity will be monitored internally as well as by a
third party to ensure it will not raise interest rates unfairly,
the banks said in a joint statement on Friday. The FTC will
monitor the loan transfers.
The steps appeared to be enough to alleviate the FTC's
concerns that the merger could limit customer choice and lead to
higher interest rates. Advisers to the FSA argued that
exemptions from antitrust law should be made to help the
industry survive. urn:newsml:reuters.com:*:nL3N1SE25M
The newly-created bank is expected to complete offloading
the loans before the merger is completed, the FTC said. If they
fail to do so, the FTC will give them one more year.
Fukuoka Financial is expected to buy Eighteenth Bank in
April next year. The merger between Eighteenth Bank and Shinwa
Bank is scheduled to be completed in April 2020, the banks said
the statement.
($1 = 110.4900 yen)
(Additional reporting by Takahiko Wada
Editing by Chris Gallagher and Darren Schuettler)
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