Japan is getting ready to relieve the antitrust regulations that are supposed to enable a few local banks to merge as they struggle to stay profitable with a declining population and low interest rates. The Japan Government wants to let such unifications to proceed on a limited basis provided the move stops a regional bank from incurring huge losses. The government as well wants the recently formed bank to make sure that it will not wrongly raise lending rates.
Present rules obstruct mergers between minor banks outside of Japan’s key cities if the recently formed bank is supposed to account for a principal share of lending in the regional community. This week, the advisory panel discussed the strategy and is supposed to finalize the details so as to include them in the government’s annual financial growth strategy estimated sometime in June 2019.
On a similar note, P&N Bank and NSW credit union BCU came into the news as they disclosed that they have agreed to $6 Billion unification. Reportedly, this unification is supposed to create one of Australia’s largest banking mutuals. The go-ahead will need about four months of due diligence following the two announced in December 2018 that they were exploring the association. The latest merger is said to be conditional if it gets approved by members and regulators.
Andrew Hadley, Chief Executive, P&N, stated the latest tie-up “is a key prospect to develop the organization and expand its presence”. As per the December 2018 Memorandum of Understanding (MoU), BCU and P&N are supposed to continue to work as individual brands. If merged, the group is supposed to create a novel top-10 Australian banking mutual with 150,000 members and about $6 Billion of assets. BCU, which was established by banana farmers in 1970, initiated the merger discussions.