Hokuriku Bank and Hokkaido Bank said Friday they have agreed to integrate their businesses under a joint holding company in fiscal 2004, creating Japan's second-largest regional bank in terms of deposits after the Bank of Yokohama.
The two leading regional banks said they will set up a joint preparatory committee to work out specific details of the integration, such as equity swap ratios and a date for the change.
They had combined deposits of 8.3 trillion yen as of the end of March.
Hokuriku Bank, based in the city of Toyama, operates mainly in Toyama, Ishikawa and Fukui prefectures. Hokkaido Bank is based in Sapporo.
The integration marks a departure from previous marriages between regional banks, which tend to seek merger partners within their areas of operation.
Both banks have been restructuring their businesses with the help of public funds. The integration is expected to improve their profitability through the closure of overlapping branches and other rationalization measures.
The two banks have a total of 322 branches and 5,347 employees. They have been cooperating in the operation of automated teller machines for the last year.