Aozora, Shinsei Merger Announcement Expected Soon

TOKYO (Reuters) – Shinsei Bank (8303.T) and Aozora Bank (8304.T) could announce their plan to merge as early as Wednesday, sources said, a deal that would bring together two money-losing lenders and create Japan’s sixth-largest bank.

The banks, which have already been discussing the merger, will begin to survey each other’s assets and work out a merger ratio, said two sources with direct knowledge of the matter.

The banks had originally planned to give details of the merger on Wednesday, but that has been delayed by both of their top shareholders, the sources said.

Now, they will just announce their intention to merge, the sources said.

Shinsei is nearly one-third owned by buyout firm JC Flowers and Co, while Aozora is majority owned by private equity firm Cerberus Capital Management.

JC Flowers is actively pursuing the merger, but Cerberus is being tougher in negotiating the deal, said one of the sources. (Reporting by Taro Fuse, writing by David Dolan)