FTC to reject merger of 2 southwestern banks

April 25, 2018

Tokyo- Japan's Fair Trade Commission plans to reject a merger between Fukuoka Financial Group Inc. and Eighteenth Bank under current terms, informed sources said Wednesday.

The FTC concluded that the merger will hamper competition and cause disadvantages, including higher lending rates, to borrowers in Nagasaki Prefecture, southwestern Japan, the sources said.

Fukuoka Financial owns Shinwa Bank, based in the Nagasaki city of Sasebo, and Eighteenth Bank is based in the city of Nagasaki. The merger will create a bank that will control some 70 percent of outstanding loans in the prefecture.

The FTC reached the conclusion after two rounds of research on the possible impact of the merger in May 2016 and February-March this year, covering Shinwa Bank and Eighteenth Bank customers in the prefecture.

Shinwa Bank and Eighteenth Bank are considering transferring some of their loans to another bank in order to lower the combined lending share. Still, there is a possibility that the merger plan will be canceled.

Fukuoka Financial and Eighteenth Bank reached a merger agreement in February 2016. But the merger has been postponed indefinitely due to the FTC's lengthy antitrust examination. A panel of experts set up by the Financial Services Agency released a report earlier this month calling for approval of the merger. Jiji Press