The “Fourth Megabank” and a regional-bank alliance (2019)

A bet on a distributed bank alliance, bound one bank at a time by capital

At the heart of this decision was the way SBI laid the revival of the regional banks and its own growth over a single design. The same headwinds — low interest rates and a shrinking population — showed up for the regional banks as a drying-up of earnings and for SBI as a shortage of nationwide customer contact points. Kitao chose a framework he could tell either as a story of saving the regional banks or as a story of SBI working its way into the regions. Beginning with a stake in Shimane Bank and binding the banks one at a time by capital, the method had a speed and a feel quite different from the conventional bank restructuring that integrates everything at once through a large merger.

The design of a distributed alliance was easy to accept in that it left the regional banks their autonomy — but that acceptability was the flip side of a weak binding force. Chikuho Bank’s departure showed that an alliance bound only by capital can come undone. Now that it has secured a core in Shinsei Bank, the task left to SBI is whether it can work a network that has reached ten banks into a single, nationwide financial base. Who supports regional finance, and how — to this unavoidable question in a Japan whose population keeps falling, SBI’s regional-bank alliance offers one answer from the private sector.