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Japan's regional bank consolidation gains momentum

Competition, regulatory nudge propel streamlining

Kansai Urban Banking is likely to merge with two other regional banks.

TOKYO -- The planned consolidation of three regional banks in greater Osaka highlights an increasingly harsh business environment and a pressing need to raise efficiency in Japan's shrinking market amid ultralow interest rates.

Resona Holdings and megabank Sumitomo Mitsui Financial Group are finalizing an arrangement to consolidate group regional banks -- SMFG's Kansai Urban Banking and Minato Bank, along with Resona's Kinki Osaka Bank. The three likely will come under a joint holding company, with Resona holding a majority stake.

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