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Daiwa, Sumitomo

banks postpone

merger decision

TOKYO: Japan's Daiwa Bank and Sumitomo Bank have decided to postpone a decision on a possible merger to the end of the year, a report said on Saturday.

The possible merger has received much attention in the banking industry here after a bond trading scandal at Daiwa's New York branch forced the Bank to withdraw from US operations.

Nihon Keizai Shimbun said Saturday the scandal had a "relatively light" impact on Daiwa Bank's overall business but had resulted in a delay in the merger decision.

Analysts earlier said they expected the merger to occur late in the third quarter of this year at the earliest after the two banks held their general shareholders meetings in June.

Officials at both the banks, however, indicated to the newspaper that a merger was unlikely to happen before early next year, it said.

No immediate comments were availbe from the banks.

US financial authorities ordered Daiwa Bank in November last year to close operations in the United States by February 2 after it was found that a New York-based Daiwa dealer had carried out fraudulent transactions of 1.1 billion dollars over an 11-year period.

Sumitomo Bank has taken over Daiwa's US operations.

Asked about negotiations on the possible merger, Daiwa Bank Management Director Yasuhisa Katsuta told a press conference in late March: "We are working on ways to rehabilitate by our own efforts." "There have been no talks held lately with Sumitomo bank."-AFP