Japan's Fukuoka, Eighteenth Bank postpone planned integration (updated)

Fukuoka Financial

25/07/2017 09:11

* Banks cite anti-monopoly issues for delay 
    * No specific date for merger given 
    * Japan's regional banks struggling to survive 
 
 (Adds background, analyst comment) 
    By Junko Fujita 
    TOKYO, July 25 (Reuters) - Fukuoka Financial Group Inc 
 8354.T  and Eighteenth Bank   8396.T , both based in southern 
Japan, said on Tuesday they would indefinitely put on hold plans 
to integrate their operations, citing anti-monopoly issues. 
    Last year, Fukuoka Financial Group, the largest banking 
group on Japan's southern-most main island of Kyushu, said it 
planned to buy Eighteenth Bank with an intention of merging it 
with Shinwa Bank, which it controls. 
    "We will continue our efforts to achieve the integration  
soon," the two banking groups said in a statement. 
    The banks said they would delay the integration plans, 
saying they were still under review by the country's Fair Trade 
Commission, and did not give a specific date for the merger. 
    The merger had already been postponed once by six months to 
October from April. Sources had said last month that the merger 
may be delayed for a second time. urn:newsml:reuters.com:*:nL3N1JN1KL 
    Japan's regional banks have struggled as the country's 
dwindling population has led to weaker loan demand. Banks' 
profits are also being squeezed by thin lending margins under 
the Bank of Japan's negative rates policy. 
    Sources have said the Fair Trade Commission (FTC) was 
objecting to the merger because the combined entity would 
control about 70 percent of loans in Nagasaki prefecture, where 
Shinwa Bank and Eighteenth Bank operate, undermining 
competition. 
    Some analysts and experts have warned that it would be hard 
for the bank to mollify the FTC's anti-monopoly concerns, 
although Nana Otsuki, chief analyst at Monex Group Inc, said 
that modern transportation systems and the use of the internet 
have loosened the grip any bank could have over a local market. 
    "The meaning of borders between prefectures has become less 
significant," Otsuki said. 
    Two smaller banks in Niigata prefecture Sea of Japan coast, 
Daishi Bank Ltd  8324.T  and Hokuetsu Bank Ltd  8325.T , have 
also agreed to merge their operations and are awaiting 
authorities' approval. 
 
 (Reporting by Junko Fujita; Editing by Subhranshu Sahu) 
 ((813-6441-1840, junko.fujita@thomsonreuters.com, Reuters 
Messaging:junko.fujita.reuters.com@reuters.net;)) 
 
Keywords: FUKUOKA FINCL EIGHTEENTH BANK/