TOKYO (Reuters) - Daishi Bank Ltd (8324.T) and Hokuetsu Bank Ltd (8325.T), two small Japanese lenders, said on Wednesday they had agreed to merge their operations, the latest consolidation in regional banks amid a decline in population.
A shrinking population and the central bank's negative interest-rate policy have created a tough business environment for Japan's roughly 100 so-called regional banks, prompting some to merge or take other steps to shore up their operations.
Daishi and Hokuetsu said the merger was needed to strengthen their management platform during this difficult time for the industry.
"Our saving and lending is expected to shrink in the future as population falls," the two banks said in a joint statement.
"Under the nation's extended monetary easing policy, our lending margin and profits from securities investments are expected to shrink as well."
The two banks, both based in Niigata prefecture on the Sea of Japan coast, will set up a holding company in April 2018 under which they will operate. The banks said they have yet to finalise how much each will hold in the new company.
Daishi and Hokuetsu would control 51 percent of the lending in Niigata prefecture, according the Financial Journal Co, an industry publication.
The consolidation of Japan's regional banks has raised some anti-competitive concerns.
The Fair Trade Commission has blocked plans by Fukuoka Financial Group Inc (8354.T) to buy Eighteenth Bank Ltd (8396.T), so it can conduct a further review. Fukuoka Financial wants to merge Eighteenth Bank with Shinwa Bank Ltd, which is already under Fukuoka's control.
If approved, Fukuoka Financial Group would control more than 70 percent of the lending in Nagasaki prefecture.
Reporting by Junko Fujita; Editing by Himani Sarkar and Randy Fabi