As Shinsei Bank and Aozora Bank consider aborting their merger, the deal’s failure comes as little surprise to those with knowledge of the terms. The merger was driven by regulatory, not commercial, concerns and did not bind shareholders to the deal.
In July 2009, Shinsei agreed to merge with Aozora and create Japan’s sixth largest bank, worth over ¥18 trillion ($186 billion). But while the deal would have solved the banks’ funding and regulatory capital problems, operationally it did not make sense:
“There was pressure...