Magazine article American Banker

Sumitomo to Merge Daiwa's Chicago Office into Its Own

Magazine article American Banker

Sumitomo to Merge Daiwa's Chicago Office into Its Own

Article excerpt

Sumitomo Bank Ltd. said it will merge the Chicago branch of Daiwa Bank Ltd. with its own office there after it completes a $3.3 billion deal to purchase Daiwa's U.S. commercial loan portfolio and offices.

Sumitomo also said it plans to retain 210 of Daiwa's 300 employees in the United States. The bank added that it will convert Daiwa's 14 other offices around the United States to offices of its own.

The decision to merge the two Chicago offices follows a deal over the weekend between the two Japanese banks. U.S. regulators last December ordered Daiwa to close its U.S. operations after the bank failed to promptly report a $1.1 billion trading scam.

Sumitomo has $30 billion in assets in the United States; Daiwa has $13 billion. A spokesman said $1 billion more in U.S. loans are being transferred to the books of Daiwa Bank Ltd., based in Osaka, Japan, while other remaining assets will be sold.

Analysts said the move marks an incremental increase in the consolidation of the U.S. banking industry. They added that the acquisition in and of itself does not give Sumitomo any real market advantage, even though the bank did acquire Daiwa's assets at a relatively favorable price.

"They might gain some small asset-based advantage, but in terms of overall strategy, we have yet to hear how it (the deal) will change their U.S. operations," said Gary Kleiman, a banking analyst with Kleiman International Consultants Inc., Washington, D.C.

However, Robert A. Rabbino, joint general manager of Sumitomo's New York branch and general counsel for the bank, said the Daiwa purchase brings a number of advantages. …

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