Sumitomo Mitsui Financial Group (SMFG) has not given up on a merger with UFJ Holdings to create the world's biggest banking group, its chief said Sunday amid a report SMFG had bettered a cash offer from a rival.
Struggling UFJ Holdings, Japan's fourth biggest banking group, said a week ago it had declined by telephone a merger offer from the Sumitomo group as it wanted to join hands with Mitsubishi Tokyo Financial Group (MTFG).
But, undaunted, SMFG president Toshifumi Nishikawa said on the private Asahi television network his group was still wooing UFJ and was ready to provide it with "necessary funds fully".
Nishikawa also said the merger would be done "in the spirit of being on an equal-footing" in an apparent bid to woo UFJ whose executives may lose posts in the aftermath of a merger with MTFG.
Newspapers reported Sunday that SMFG had sent a written merger proposal to the UFJ group on Saturday following the refusal of UFJ management to meet Sumitomo Mitsui executives in person.
The proposal says Sumitomo Mitsui will inject more than 500 billion yen (4.5 billion dollars) into UFJ, which has been struggling under a mountain of non-performing loans, and calls for the establishment of a joint holding company by April 2005, the Nihon Keizai and Asahi Shimbun newspapers said.
The offer was apparently better than about 500 billion yen committed by rival MTFG, Asahi said, adding Sumitomo Mitsui had said in the letter the capital injection could be expanded to a maximum 700 billion yen.
The proposal also envisages the merger of banking units under the holding company in October 2005, the papers said.
The Nihon Keizai economic daily added UFJ Holdings was still believed to be sticking to its original plan to merge with MTFG.
Other reports said UFJ would seek assistance from auto-maker Toyota Motor Corp and Nippon Life Insurance in addition to funds from MTFG.
UFJ Holdings needs more money to dispose of increased bad loans, the Yomiuri and Mainichi Shimbun said. The group announced last Friday its non-performing loans reached 4.62 trillion yen at the end of June, up from 3.95 trillion yen three months ago.
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