The merger involves Fukuoka Financial Group and local rival Eighteenth Bank.
A proposed merger between two banks in southern Japan will likely be delayed for a second time over monopoly concerns, sources said, highlighting the difficulty regional banks face in trying to consolidate to survive the shrinking market, according to Reuters.
"Last year, the largest banking group on the island of Kyushu, Fukuoka Financial Group Inc, said it wanted to buy local rival Eighteenth Bank. It intended to merge it with Shinwa Bank, which it already controlled. But Japan's Fair Trade Commission objected because the merged entity would control an unprecedented level of about 70 percent of loans in Nagasaki prefecture. The FTC argued the merger would undermine competition and lead to higher interest rates, poorer service and branch closures in remote areas," Reuters said.
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