Japanese lenders Bank of Yokohama and Chiba Bank have entered into a business partnership as prolonged low-interest rate policy of the country’s central bank has negatively affected profitability of banks.
The two lenders signed an agreement to partner in various segments including retail banking, database marketing as well as mergers and acquisitions.
However, a merger between the banks is not currently considered, the banks said in a press conference.
The move is expected to support the two banks to revive their businesses.
An aging population and changing business environment are also affecting the profits of the regional banks.
Chiba Bank president Hidetoshi Sakuma was quoted by Reuters as saying: “Progression in ageing, prolonged negative interest rates, and different industries’ entry have largely changed our business environment.”
Bank of Yokohama is one of the largest regional banks in Japan with assets of around JPY 16.8 trillion ($154.34bn). Chiba Bank assets stand at JPY14.9trillion, according to Reuters.
Primarily, Japanese banking system is dominated by three majors Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group.
Recently, Japan’s Mitsubishi UFJ and Sumitomo Mitsui Banking entered into a partnership to share ATM network.
The move is also aligned to reduce costs, associated with maintenance and operations of teller machines.