Aozora and Shinsei Agreed to Merge

According to their press release yesterday, Aozora Bank and Shinsei Bank announced that the banks have agreed to a merger of equals, subject to approval from shareholders and relevant regulatory authorities and the satisfaction of certain other conditions. The banks received approvals from their respective Boards of Directors. The new entity will be the sixth largest banking group in Japan with total assets of about 18 trillion yen on an aggregated basis as of March 31, 2009. It is expected that Mr. Norito Ikeda, who is currently a Special Advisor to AT Kearney KK and former President of Ashikaga Bank, will be nominated to the Board of Directors and named President and CEO.

The merger process was said to be ups and downs thanks to the speculation of major shareholders. But the bottom line was that since both banks incurred large amounts of red ink, it would be a unlikely for each of them to survive by themselves in the future.