Business

Two Japanese banks cancel merger

Shinsei Bank
Image caption The merger was called off as Shinsei revealed heavy annual losses

Japan's Shinsei Bank and Aozora Bank have cancelled a merger that would have created the country's sixth-largest bank.

The firms said they were calling off the deal after considering changes in the business environment since they announced merger plans in July 2009.

It came as Shinsei posted a net loss of 140bn yen ($1.5bn; £1bn) for the year.

It is one-third owned by US buyout firm JC Flowers and 24% owned by the government.

Capital plans

It said it would now focus more on the retail rather than investment banking.

Shinsei also said it was hoping to boost its capital this year.

"We would like to raise capital during this financial year, though the amount will not be that big," said the bank's president Masamoto Yashiro, adding it would be less than 100bn yen.

Shinsei ended down 4.5% at 106 yen and Aozora down 5% at 114 yen.

Meanwhile, Japan's second-biggest bank, Mizuho Financial, said it planned to boost capital through a share issue worth 800bn yen.

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