Thursday June 25, 05:23 AM
Japan's Shinsei, Aozora say in merger talks
TOKYO (AFP) - Troubled Japanese lenders Shinsei and Aozora said that they were exploring a possible merger that would create the nation's sixth biggest commercial bank.
Shinsei Bank (Berlin: LCJ.BE - news) and Aozora Bank both confirmed in brief statements that they were holding discussions about a possible tie-up but gave no further details.
Earlier Thursday, public broadcaster NHK reported, without naming its sources, that the pair had reached a basic agreement to merge next year.
The lenders, both backed by US investment funds, are struggling to find a niche in the face of a weak economy and financial markets as well as growing competition with larger rivals.
Shinsei, which is about one-third owned by US buyout firm JC Flowers & Co, has been hit hard by the global credit crunch and last year said it would sell its Tokyo headquarters for more than one billion dollars.
Aozora, which is roughly half owned by US investment fund Cerberus, has fallen deep into the red because of exposure to failed Wall Street giant Lehman Brothers (NYSE: LEH - news) , troubled auto finance giant GMAC (NYSE: GOM - news) and other bad investments.
The two lenders were bailed out with public money during Japan's 1990s banking crisis and later sold to private investors. Both remain part-owned by the Japanese government.
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