Competition in the private banking business got tougher Wednesday after Mitsubishi Tokyo Financial Group Inc. and Merrill Lynch & Co. announced they will set up a joint-venture brokerage targeting wealthy customers.

The plan is to combine MTFG's wide retail network with Merrill Lynch's expertise in product development to cash in on private banking in the world's second-largest economy, which finally appears to be on track for a recovery.

The news comes ahead of Saturday's merger between MTFG and UFJ Holdings Inc., including integration of their trust banking and brokerage units. The core banking units will merge Jan. 1, creating the world's largest banking group by assets.