16 May 2010

Japanese banks cancel merger

7:10 am on 16 May 2010

Two banks in Japan have cancelled a merger that would have created the country's sixth-largest bank after one of them revealed heavy annual losses.

The Shinsei Bank and Aozora Bank said they were calling off the deal after considering changes in the business environment since they announced merger plans in July 2009.

Shinsei has posted a net loss of 140 billion yen ($US1.5 billion) for the year.

It is one-third owned by US buyout firm JC Flowers and 24% owned by the government.

Shinsei said it would now focus more on the retail rather than investment banking.

Shinsei also said it hopes to boost its capital by up to 100 billion yen this year.

Meanwhile, the BBC reports Japan's second-biggest bank, Mizuho Financial, said it planned to boost capital through a share issue worth 800 billion yen.