Daiwa Bank may join a "super-regional banking" alliance being planned by Asahi Bank and Tokai Bank, industry sources said Wednesday night.

According to the sources, if financially ailing Daiwa — the only one of the nine city banks with its own trust operations — joins the alliance, it may seek to sell its trust businesses to Asahi and Tokai, which are based in Tokyo and Nagoya, respectively.

Although Osaka-based Daiwa has been straining under the weight of massive nonperforming loans, it nevertheless is entertaining plans to become a super-regional bank itself. But a three-way, super-regional tieup would give such an alliance a solid presence in the country's three-biggest metropolitan areas — Tokyo, Osaka and Nagoya.

Asahi and Tokai in September announced they would enter into an extensive tieup agreement featuring joint development of investment trusts as well as integration of their securities and trust banking units.

In contrast to its trust operations niche, however, Daiwa at present has the lowest share prices and loan-loss ratio of the nine city banks. At the end September, Daiwa held nonperforming loans worth about 934.4 billion yen, but had disposed of 48 percent of them with loan loss reserves. The ailing bank is reportedly mulling an application for 300 billion yen in public funds under the government's bank recapitalization scheme. It has also announced it will pullout from operations abroad.