Sakura Bank and Fujitsu Ltd. announced Monday they have agreed to jointly form the nation's first bank specializing in online operations.

The online bank will be offered by @nifty, an Internet service provider Fujitsu plans to launch this fall by combining its Infoweb Internet service and the Nifty-Serve online service of Nifty Corp., a Fujitsu subsidiary.

The bank plans to offer such services as account settlement, time deposits as well as foreign currency exchange and small-lot loans, officials said.

The officials added they hope to launch the business by the early part of fiscal 2000.

Sakura will own 90 percent of the new bank, which will be capitalized at about 20 billion yen. Fujitsu will own the remaining 10 percent.

Presidents of the firms told a joint news conference that they decided to set up an Internet bank at this time because Japan is on the verge of an "Internet explosion."

"The number of Internet users in this country is expected to reach 200 million as early as next year," Sakura Bank President Akishige Okada said. "We expect that a time will come soon when a large part of the population will use Internet banking as a common tool."

Unlike traditional brick and mortar banks, the new bank, whose name is yet to be decided, will cut costs because it will not need to build branch networks, the officials said, adding that the bank will start with an initial workforce of 20 people.

Fees for account settlements and interest rates for loans are under consideration. Okada said the bank will "return the benefits" of cost-effectiveness to consumers, indicating that it will offer lower fees than conventional banks.