Sanwa Announces Merger; Would Be World’s Third-Largest Bank

TOKYO —  Sanwa Bank Ltd., Tokai Bank Ltd. and Asahi Bank Ltd. said they agreed to merge into what would become Japan’s second-largest bank and the world’s third largest.

The presidents of the three banks will announce details of the merger at a press conference today. The banks said they would set up a holding company by April 2001.

“We can combine [our] housing loans and consumer loans businesses and be more profitable,” the banks said in a statement.

The resulting bank would have about $1 trillion in assets, becoming the third-largest in the world if two other announced bank mergers proceed. Sanwa is joining a merger frenzy that has seen five Japanese banks agree to combine in the past seven months. Sanwa is the parent of Sanwa Bank California.

Japanese lenders are racing to find partners to split the cost of updating systems. Those are investments many banks, still burdened by loans made to corporate clients during the country’s long recession, can’t afford to make alone, analysts said.

“They have to join up so they can afford to upgrade their information technology systems,” said Nobuaki Kurisu, senior fund manager at Sumisei Global Investment Trust Management Co.