* Move to create Japan's sixth-largest bank
* Banks seen making announcement this month-paper
* Plan to set up a holding firm in the middle of 2010-paper
* Shinsei shares gain 8 pct; Aozora rises 12 pct
TOKYO, May 11 Shinsei Bank (8303.T) and Aozora
Bank (8304.T) have agreed to merge around the middle of next
year, the Nikkei business daily reported on Monday, a move that
would form Japan's sixth-largest bank.
The banks may make an announcement this month, the paper
Shares in Shinsei rose 8 percent after the report and Aozora
gained 12 percent, both extending earlier gains.
The paper said Shinsei, owned 32.6 percent by buyout firm JC
Flowers and Co., and Aozora, owned 53.6 percent by Cerberus
Capital Management [CBS.UL], had likely received approval from
their major shareholders for the merger.
Jiji news agency had reported last month that the two
shareholders were opposed to the merger. [ID:nT145835]
Financial sources had previously said the banks aimed to
reach a deal and announce the framework of the merger by May 13
when Shinsei is scheduled to report its earnings results for the
last financial year.
The banks plan to set up a holding firm in 2010 and merge in
a year or so afterward, the paper said. It added JC Flowers and
Cerberus will likely remain shareholders in the holding firm.
Shinsei spokesman Eiji Otaka and Aozora spokesman Tsutomu
Jimbo declined to comment on the report.
Both lenders were nationalised during Japan's banking crisis
in the 1990s and later sold to foreign funds.
A new, merged bank would be on a stronger footing but will
liekly need even more government money and may still struggle to
compete in domestic lending against mega-banks such as Mitsubishi
UFJ Financial Group (8306.T), analysts have said.
Shinsei rose 8.2 percent to 145 yen and Aozora climbed 12
percent to 145 yen.
(Reporting by Sachi Izumi; Editing by Edwina Gibbs)