Japanese regional lenders Aomori Bank and Michinoku Bank have confirmed that they are planning to integrate their operations.
The step comes as several Japanese lenders consider consolidating their businesses amid shrinking population and low interest rate.
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Aomori Bank and Michinoku Bank operate in the northern prefecture of Aomori. A business consolidation will provide the combined lender with 70% market share in the prefecture, reported Reuters.
The regional banks in the country played a key role amid the Covid-19 pandemic, the news agency added. However, the crisis has also increased the risk of a jump in bad loans in the future.
Last month, the central bank of the country Bank of Japan said in a report: “Even after the pandemic subsides, financial institutions’ profits will remain under pressure from low interest rates and structural factors.”
The BOJ also devised a programme to encourage regional lenders to consolidate.
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By GlobalDataSeparately, Nomura signed a memorandum of understanding with three Japanese banks to explore the feasibility of forming a joint venture for providing financial consulting services.
The three banks are The Chiba Bank, Daishi Hokuetsu Bank, and Chugoku Bank.
The MoU details the fundamental principles and other necessary considerations for establishing the JV.
A final agreement regarding the initiative is expected to be signed in the second quarter of this year.
