UPDATE 6-Sumitomo Trust, Chuo Mitsui say to merge

* Combined assets under management of $640 billion

* Share swap set for April 2011, full merger year later

* Analyst: Trust bank market is "oversupplied"

* Sumitomo Trust shares end down 0.8 pct, Chuo falls 2.2 pct (Adds Chuo Mitsui president comments, S&P report)

By David Dolan

TOKYO, Nov 6 (Reuters) - Sumitomo Trust and Banking Co Ltd (8403.T) and Chuo Mitsui Trust Holdings Inc (8309.T) said they plan to merge, creating Japan's largest trust bank with a scale to better compete in a crowded asset management industry.

Sumitomo Trust, Japan's fifth-largest bank, and sixth-ranked Chuo Mitsui said they planned to exchange shares on April 1, 2011, and form a holding company. The merger will likely be completed by April 2012, with the bank to be called Sumitomo Mitsui Trust Bank, the two firms said in a release.

A merger ratio will be decided at a later date.

The combined bank would have 58 trillion yen ($640 billion) in assets under management, including corporate pension funds and investments, making it Japan's largest asset management group.