TOKYO (Reuters) - Japan's Shizuoka Bank (8355.T) sees no merit in merging with rival regional lenders for its long-term survival and will instead focus on boosting its online presence, its president said.
"Banks' core business is deposit-taking and lending and it is not so profitable now," Katsunori Nakanishi, president and CEO of Japan's fourth-largest regional lender, told Reuters in an interview.
"Bank consolidation means just combining unprofitable businesses. I don't see any meaning in it," he said.
Japan's more than 100 regional banks have been in the spotlight over the past year on expectations of mergers and acquisitions, especially as the regulator has been advocating sector consolidation.
The regional lenders make up roughly half of the country's $3.5 trillion in outstanding bank loans. Their profits from lending fell 2 percent for the six months to September, government data shows.
In closed-door meetings with regional bank heads, senior officials at the Financial Services Agency have urged consolidation unless the lenders can present a viable growth plan amid the projected decline in the country's working-age population.
In November, two pairs of banks, including second-largest Bank of Yokohama Ltd 8332.T, announced mergers, stoking hopes that more would follow.
But Nakanishi, who heads the bank based in Shizuoka, central Japan, home to Suzuki Motor Corp (7269.T) and Yamaha Motor Co Ltd (7272.T), said he was skeptical consolidation would solve the regional banks' growth woes.
Shizuoka Bank will seek opportunities in areas traditional lenders have not been quite able to catch on, including payment services and other financial services tied to online transactions, he said.
Nakanishi said Amazon (AMZN.O) and other non-bank players were encroaching upon the financial services area overseas. "The trend is catching on in Japan too, like Line," he said, referring to Line Corp IPO-LINE.T, which provides money settlement services on its messaging app.
In April last year, Shizuoka Bank acquired a 20 percent stake in online broker Monex Group Inc (8698.T) and Nakanishi said the two companies are planning to launch new online businesses. He declined to elaborate.
The bank is considering tie-ups with logistics and retail companies to provide payment and other financial services, he said.
Nakanishi also said the bank wants to buy a website operating company as part of its online service strategy once Japan relaxes rules on bank holding companies owning non-financial service companies, which is currently under the government's consideration.
Editing by Muralikumar Anantharaman