Japanese Companies Discuss Merger

Sumitomo Bank Ltd. and Sakura Bank Ltd. said they are in talks to merge, a deal that would create the world’s second-largest bank at nearly $940 billion in assets. The companies said no decision has been made on the timing of a merger and that no other financial institutions are involved in the negotiations. Japan’s Nihon Keizai financial newspaper reported that the banks will probably merge in two years. The banks said they were not yet prepared to give any details. The talks follow an announcement in August by Dai-Ichi Kangyo Bank Ltd., Fuji Bank Ltd. and Industrial Bank of Japan Ltd. that they would merge by early 2002 to form the world’s largest bank. The current global leader is Deutsche Bank of Germany. The alliances mark the biggest steps so far by Japanese banks to rebuild as Japan emerges from its deepest recession since World War II. The banks, saddled with trillions of yen in bad loans, are racing to become more competitive as Japan deregulates its financial markets.