TOKYO, Aug 1 (Reuters) - Japan’s Fair Trade Commission is likely approve the merger of regional banks Fukuoka Financial Group Inc and Eighteenth Bank Ltd as early as this month, a source with direct knowledge of the matter told Reuters on Wednesday.
Japan’s Financial Services Agency has been promoting consolidation of regional banks as they struggle with weak loan demand and margin pressure from the Bank of Japan’s negative rates policy.
But the anti-trust watchdog, the FTC, had prevented the transaction from proceeding over anti-monopoly concerns.
The Nikkei business daily earlier reported the FTC was nearing approval, lifting shares in the two banks by more than 8 percent.
Fukuoka Financial Group wants to merge Eighteenth Bank with its Shinwa Bank unit. The combined entity would control more than 70 percent of lending on Japan’s southern-most main island of Kyushu.
The FTC said it could not comment on cases under review. Representatives of the two banks declined to comment.
The two banks have been considering offloading loans to other lenders after they were told by the FTC to take measures to reduce their market share in April, the source said on the condition of anonymity.
They have approached around 20 other lenders, with the total amount offloaded to top 100 billion yen ($892.6 million). Bank of Saga Ltd and Kagoshima Bank have shown interest, according to the source.
$1 = 112.0300 yen Reporting by Takahiko Wada; Writing by Sam Nussey; Editing by Stephen Coates