Mitsui Trust & Banking Co. and Chuo Trust & Banking Co. announced Tuesday that they have reached basic agreement to merge in April 2000 to become the nation's biggest trust bank with a combined capital of more than 40 trillion yen.

The banks' top executives told a news conference that the merger plan came out of both sides' need to survive in the financial industry, where deregulation is rapidly changing the landscape and making competition tougher than ever.

The two sides agreed that the new bank, which is expected to be born on April 1, 2000, will be called the Chuo Mitsui Trust Bank Co., and that Chuo will be the surviving company.

One Mitsui Trust share will be exchanged for 0.3 share of Chuo Trust. The chairman of the new body will be selected from Mitsui Trust, while its president will be from Chuo Trust, the officials said. Mitsui Trust, established in 1924, had total assets of 10.6 trillion yen as of Sept. 30 1998, while the figure for Chuo came to 5.1 trillion yen.

The volume of the new bank's total assets in trust would come to 45.6 trillion yen, the largest among trust banks in Japan. The merger will make the planned bank the "biggest and strongest trust bank" and the industry leader in business areas such as asset management of corporate pensions and investment trusts, the banks said in a joint press release.

Mitsui, as a member of the Mitsui "zaibatsu" group, has a strong client base among large corporations. Chuo has taken over a portion of the operations of the failed Hokkaido-Takushoku Bank and now boasts a broad client base among small and midsize corporations, they said.