Japan FTC to End Nagasaki Bank Merger Screening

August 2, 2018

Tokyo- Japan's Fair Trade Commission is expected to conclude its antitrust screening of a merger plan involving regional banks in Nagasaki Prefecture.

Those planning the merger are Eighteenth Bank, based in the city of Nagasaki, and Fukuoka Financial Group Inc., which owns Shinwa Bank, based in Sasebo, another city in the southwestern Japan prefecture.

The two sides have decided to transfer to other lenders nearly 100 billion yen in loan claims in total, in order to lower their combined share in the bank lending market in Nagasaki Prefecture.

If the FTC gives its approval, the two sides will implement their plan in April 2019.

The antitrust watchdog is checking financial institutions that are being asked to acquire the loan claims.

"Some financial institutions are still examining the terms of the transfers and considering how much claims they should accept," an informed source said.

The commission is checking whether the transfers will be carried out as planned.

Fukuoka Financial and Eighteenth Bank agreed on the deal in February 2016.

They initially planned to merge in April 2017, but the marriage was put off by six months as the FTC screening continued. In July 2017, they decided to put off their integration indefinitely.

The merger would create a group controlling 70 pct of the bank loan market in the prefecture.

The FTC will not approve the merger unless measures are taken to reduce the huge share. The commission is concerned that the merged group may use its strong bargaining power to make small businesses accept loan rate hikes.

In May this year, Fukuoka Financial and Eighteenth Bank asked 16,000 clients in the prefecture whether they would approve transfers of loan claims against them to other financial institutions.

Last month, the two companies sounded out 20 financial institutions about whether they would receive loan claims held by the two. The 20 lenders include regional banks, shinkin banks and Shoko Chukin Bank.

Bank of Saga and Kagoshima Bank have agreed to acquire all the amounts they were asked to receive. Nishi-Nippon Financial Holdings Inc. which holds Bank of Nagasaki, also agreed to cooperate. Jiji Press