Report: Major Shareholders Appose Aozora/Shinsei Merger

TOKYO (Reuters) – A merger between Shinsei Bank (8303.T) and Aozora Bank (8304.T) is facing difficulties as they were not able to get consent from their major shareholders, Jiji news agency reported on Wednesday.

The two money-losing lenders were considering merging next April to create Japan’s sixth-largest bank with an announcement slated as early as May 13, financial sources had told Reuters.

Both banks were nationalized during Japan’s banking crisis in the 1990s, and Shinsei is about one-third owned by buyout firm JC Flowers and Co, while Aozora is more than half owned by private equity firm Cerberus Capital Management.

Shinsei and Aozora will continue efforts to convince their major shareholders while seeking other ways to enhance ties with each other, Jiji reported without citing sources.

None of the companies, including Cerberus and JC Flowers, were immediately available for comment.

The two big owners of the banks argued that simply merging without a strategy to enhance both banks’ weak customer base would not boost their profitability, Jiji reported.

(Reporting by Leika Kihara; Editing by Jean Yoon)