Sumitomo Trust, Chuo Mitsui to merge into Japan's top trust bank+

TOKYO, Nov. 6 Kyodo -
Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc. announced
Friday a plan to integrate management in April 2011 that will create Japan's
largest trust bank.

By reinforcing their management through the integration, the two lenders aim to
better compete in the deteriorated business environment in the wake of the
global financial crisis.
The gross assets of the new trust bank would total around 36 trillion yen,
surpassing those of current leader Mitsubishi UFJ Trust and Banking Corp. It
would be the fifth-largest lender among Japanese banking groups.
''The business environment has become very severe and its prospects are
uncertain,'' Chuo Mitsui President Kazuo Tanabe said at a press conference,
referring also to the increasing need for banks to brace for tougher capital
requirements.
The management integration will be carried out under a holding company that
will be created through a stock swap on April 1, 2011, between Sumitomo Trust
and Chuo Mitsui and will adopt the latter's existing holding system.
While the new holding company is likely to be called Sumitomo Mitsui Trust
Holdings Inc., the stock swap ratio has yet to be decided.
The holding company will hold three trusts banks -- Sumitomo Trust, Chuo Mitsui
Trust and Banking Co. and Chuo Mitsui Asset Trust and Banking Co. -- under its
wing and will merge them on April 1, 2012.
The bank to be created through the merger of the three banks is planned to be
called Sumitomo Mitsui Trust Bank. Sumitomo Trust will be the surviving entity
in the merger.
The new bank would have more than 181 trillion yen in total outstanding assets
in trust.
Sumitomo Trust President Hitoshi Tsunekage said at the same press conference
that the integration should create great synergy effects as the two lenders are
in the same business and their customer bases are complementary. ''We view
(Chuo Mitsui) as the best partner,'' he said.
Sumitomo Trust is strong in asset management for corporate clients while Chuo
Mitsui Trust Holdings concentrates on services for individual customers such as
providing housing loans and selling investment trusts.
Sumitomo Trust, which was formed in 1925, has remained independent even as
major rivals joined megabank groups.
Chuo Mitsui is about 30 percent owned by the government, which injected public
money as part of a bank bailout in the late 1990s.
Chuo Mitsui's Tanabe said it is still not known when the lender will be able to
return about 200 billion yen of public money, and if the repayment is not
completed before the merger, the money will be returned by the merged bank.
The new holding company's board chairman will come from Sumitomo Trust and its
president from Chuo Mitsui Trust Holdings, while the number of board members
will be equally split between the partners.
Sumitomo Trust and Chuo Mitsui Trust Holdings have already set up a joint
committee, headed by their presidents, to smooth the management integration.
In fiscal 2008 ended in March, Sumitomo Trust's group net profit plunged 90.3
percent from a year before to 7.95 billion yen amid the global financial
crisis, while Chuo Mitsui Trust Holdings suffered a group net loss of 92.03
billion yen against a profit of 71.84 billion yen in the previous year.
==Kyodo
2009-11-06 22:50:31