Likely Nomura exit from lender may spur Japan regional bank shake-up

Thu Dec 19, 2013 5:21am EST
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By Taiga Uranaka

TOKYO (Reuters) - Ashikaga Holdings Co Ltd's 7167.T return to Japan's stock market has rival lenders bracing for the exit of its main shareholder Nomura Holdings Co 8604.T - an event expected to trigger consolidation among the country's regional banks.

Japan has more than 100 regional banks, accounting for around 40 percent of the country's $4.6 trillion in outstanding loans. But overall loan demand has shrunk 10 percent over the last 20 years, prompting regulators to call for convincing growth strategies and increasing pressure on the banks to consider acquisitions.

Any unloading of Nomura's 38 percent stake - one that translates to effective control - is likely to go to another regional bank in a neighboring market, rocking the boat in highly competitive regions just north of Tokyo and spurring other lenders to also bulk up, industry experts say.

Nomura bought into Ashikaga in the wake of the bank's nationalization 10 years ago due to bad debts. But the investment by Japan's biggest brokerage was purely financial and an exit is widely seen as just a matter of timing.

"Ashikaga's listing is not the end of the story. Our attention is on whom Nomura will sell its stake to," said a senior executive at a rival regional bank.

"It will definitely be a trigger for industry consolidation," said the executive, who declined to be identified.

It is not clear when Nomura will begin talks to offload the stake but a source familiar with the investment bank's thinking said it "was considering action that would encourage regional bank consolidation in the not too distant future".

Nomura said that nothing had been decided and that it would look at all possible options in the future.   Continued...

A man holding an umbrella walks past a signboard of Nomura Securities outside its branch in Tokyo October 29, 2013. REUTERS/Issei Kato