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Japanese regional banks to halve by 2025

The leaders of Kagoshima Bank and Higo Bank shake hands at the launch of Kyushu Financial Group in 2015, a consolidation of the two regional banks.

TOKYO -- Japan will undergo a major consolidation of regional banks in the coming decade, as a shrinking customer base and negative interest rates squeeze profitability, according to a new report by consulting company Bain & Co.

     Bain predicts that the current 97 regional banks will likely halve to around 50 banks by 2025. While Japan has seen the number of such banks decrease from 132 in 1990 to 97 today -- and down to 94 in 2017 as Bank of Yokohama, Fukuoka Financial Group and Tomony Holdings each have announced further mergers and acquisitions -- the pace of consolidation will accelerate, according to Matt Sweeny, principal at Bain & Co. Japan.

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