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Japanese banks eye cross-group custody services merger

Mizuho, Sumitomo Mitsui Trust set to create dominant domestic player this year

Sumitomo Mitsui Trust Holdings and Mizuho Financial Group, two of Japan's top banking groups, plan to combine their custody services businesses this year.

TOKYO -- Mizuho Financial Group and Sumitomo Mitsui Trust Holdings have entered talks to combine their custody services operations, crossing group lines as extremely low interest rates force the industry to compensate for low profits with high volume.

The two aim to integrate Trust & Custody Services Bank, in which Mizuho holds a 54% stake, and Japan Trustee Services Bank, in which Sumitomo Mitsui Trust has a roughly 67% interest. The main proposal entails bringing the custodians together under a single holding company this year. The groups aim to merge the banks by 2020 as well as consolidate their systems, a process that will require a hefty financial outlay.

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