Japan's Aozora says in talks to merge with Shinsei

TOKYO, June 25 (Reuters) - Aozora Bank (8304.T), hurt by soured investments and exposure to the subprime loan market, said on Thursday that it and rival Shinsei Bank (8303.T) are in talks on a possible merger, but that no decision has been made.

The two formerly nationalised banks plan to merge operations next year and make an announcement as soon as early July, public broadcaster NHK said.

Aozora is majority-owned by U.S. firm Cerberus Capital Management [CBS.UL], and Shinsei is one-third owned by buyout firm JC Flowers and Co. (Reporting by Mayumi Negishi; Editing by Chris Gallagher)