Yachiyo Bank and state-appointed administrators of Kokumin Bank announced Tuesday that the two parties have reached a basic agreement to have Yachiyo take over the failed second-tier regional bank. Of the five second-tier regional banks that went under after the financial reconstruction law took effect in October 1998, Kokumin, which collapsed in April, is the first to be sold to a third party. The remaining four -- Kohoku, Namihaya, Tokyo Sowa and Niigata Chuo -- are still in the hands of administrators. Yachiyo President Tomoaki Fujiyama told a news conference that the bank believes the acquisition is ideal because, although both banks are based in Tokyo, their operational bases do not greatly overlap. He added that the acquisition will enable Yachiyo to expand its network of branches throughout the entire Tokyo area. Yachiyo, a second-tier regional bank, plans to take over 22 of the 37 existing branches and 300 of Kokumin's 687 employees, the officials said. As of the end of March 1999, Yachiyo had total assets of approximately 1.81 trillion yen and about 1,900 employees at 69 branches in Tokyo and Kanagawa Prefecture. The officials added that they hope to reach a final agreement by the end of February. The actual business transfer is expected to be completed in summer. The government will provide between 140 billion yen and 150 billion yen in public funds to compensate for Kokumin's capital deficit and to further pad the failed financial institution's loan loss reserves, the administrators said. Yachiyo officials also said they plan to apply for an injection of public funds totaling some 30 billion yen. Yachiyo will acquire Kokumin's healthy assets, worth 206.8 billion yen, which the administrators classify as loans to healthy borrowers. The bad assets, which total 226.6 billion yen, will be sold to the state-backed Resolution and Collection Corp. Yachiyo will also take over all of Kokumin's deposits, worth 288.8 billion yen as of the end of September, the officials said.