By Leika Kihara and Takahiko Wada
NAGASAKI, Japan, Oct 8 (Reuters) – Once seen as a model for consolidation, the merger of two regional banks in Nagasaki may expose flaws in Prime Minister Yoshihide Suga’s plan to revitalise regional economies by creating stronger lenders.
In Nagasaki’s distant past, the city was a stronghold of trade and finance. These days, Japan’s larger ports soak up all the business, and local banks, crippled by a stagnant economy and shrinking customer base, scrap for profits.
That made the Oct. 1 merger of Eighteenth Bank and Shinwa Bank a potential test case for turning around the city’s fortunes. The new institution, formed after a lengthy battle between the antitrust watchdog and financial regulators, has a roughly 70% share in the southern Japanese prefecture.
The merger has the blessing of Suga, who has emphasised the need for regional banks to consolidate to survive dwindling