Regional banks in northern Japan to consider three-way merger

Three regional banks in northern Japan are set to begin merger talks, people familiar with the matter have said, in a fresh sign that industry consolidation is gaining momentum as the population declines.

Aomori Michinoku Bank, Bank of Iwate and Akita Bank in the Tohoku region are expected to announce the discussions as early as Friday, said the people, who asked not to be identified as the information isn’t public.

The move by three leading banks in neighboring prefectures is likely to send ripples through the industry, adding to a wave of consolidation. Banks face growing pressure from grim demographics and an intensifying fight for deposits in a rising interest-rate environment. The three banks are based in areas that have some of the steepest population declines in Japan.

Aomori Michinoku, a unit of Procrea Holdings, was itself created through a recent consolidation. Two banks in Aomori Prefecture came under the holding company in 2022 before merging into a single lender in 2025.

Shares of Procrea rose as much as 6.7% in Tokyo on Friday morning. Bank of Iwate and Akita Bank climbed more than 3%. Shares of all three lenders have more than doubled this year.

Procrea, Akita Bank and Bank of Iwate issued separate statements saying their respective boards will discuss the prospect of merger talks on Friday and nothing has been decided. Kyodo News first reported the planned discussions.

The combination will create a banking group with more than ¥13 trillion ($82 billion) in assets, topping the area’s biggest lender — 77 Bank, which is based in Sendai.

Given the dire demographic prospects in rural areas, Japan’s Financial Services Agency has been pushing the country’s regional banks to draw up viable long-term visions, including combining part or all of their operations with rivals.