Shinsei, Aozora call off merger: report

(Reuters) - Shinsei Bank (8303.T) and Aozora Bank (8304.T) have decided not to merge in October as planned because they could not agree on a business strategy, the Nikkei business daily said without citing any sources.

While Shinsei wants to expand its retail operations, including non-bank financing, Aozora is more keen on working with regional banks, the paper said.

The merger will either be abandoned or postponed indefinitely, the paper said.

The Financial Services Agency is expected to urge the two banks to come up with new business strategies, the Nikkei said.

Shinsei will work on a capital-raising plan, while Aozora will seek growth through alliances with local banks, the business daily said.

Aozora is approaching Norito Ikeda, the man picked to head the post-merger bank, about joining its management, the paper added.

(Reporting by Jennifer Robin Raj in Bangalore; Editing by Anne Pallivathuckal)