Kansai Mirai Financial Group: consolidating the Kansai retail base (2017)

A realignment across group lines — and what it left

What stands out in this realignment is that it accepted, at least once, a configuration that would not normally hold: two megabank groups riding together on a single listed regional bank. To take in two Sumitomo Mitsui banks and with them the Kansai-wide branch network its own Kinki Osaka Bank could never reach, Resona began by deliberately leaving Sumitomo Mitsui in place as an equity-method shareholder. Rather than erasing the signboards at once through a full merger, it lined the banks up under a holding company and drew them together in stages — an extension of the very multi-bank model with which Resona had been running Kanto and Kansai from one head office.

But riding together carried the problem of a listed subsidiary whose interests could collide with its parent’s. That Resona folded the structure three years later by taking the company wholly in-house coincided with a period in which the market’s eye on governance was hardening. Flexibility at the entrance, where bases were pooled across group lines, and consistency at the exit, converging on a single group, lived side by side in this realignment. In a Kansai where the population is shrinking, how much earning power can the consolidated retail base be turned into? Whether the branch network gained through this realignment bears fruit looks likely to be decided in the next few years.