Japan’s Shinsei and Aozora Banks announce plans to merge and form Japan’s sixth largest banking group.

Two of Japan’s biggest banks – Aozora and Shinsei – have announced plans to merge and create the sixth largest banking group in Japan, with assets of 18 trillion yen (£113 billion).

In a joint statement, the banks said the new entity would “offer an enhanced operating platform” and will “deliver long-term, stable and sustainable earnings, providing value to all stakeholders.”

Both banks have emphasised that it will be a “merger of equals”, with Shinsei bank as the surviving corporation and Aozora Bank as the dissolving corporation.

Between them they employee nearly 9,000 people and no announcement has been made with regards to the security of the roles within the newly-created bank.

Japan’s economy has been struggling amidst the worsening economic climate and last month Japan’s Ministry of Finance reported that prices had fallen by the most on record (since the 1970’s) in May at a rate of 1.1%, raising fears of a new bout of deflation.

No name or location for the new bank has been announced and the merger is still subject to approvals from shareholders, which is expected by October 2010.