Monday, Jan. 31, 2000
Staff writer Top executives of Mitsui Trust & Banking Co. and Chuo Trust & Banking Co. were inundated with questions from reporters Monday as they announced the reversal of an earlier decision regarding the leadership structure of a bank to be set up through a merger of the two firms in April. When the two trust banks initially announced the merger plan in January 1999, the officials explained that a Chuo executive would become president of the new bank and that a Mitsui official would take the chairman's post. On Monday, however, the banks said they had changed their minds. From the date of their merger, April 1, Mitsui President Kiichiro Furusawa will take the position of president, while Chuo President Hideie Hirakawa will assume the role of vice president. The officials refused to elaborate on the internal negotiations that led to the decision, repeating that it was decided "after serious discussions between top officials from both banks." But the turnaround is prompting speculation that Mitsui Trust became frustrated with their apparent disadvantageous position in the merger deal and demanded the top post. When Mitsui Trust announced it would merge with Chuo Trust about a year ago, the members of the prestigious Mitsui corporate group were saddled with huge bad loans and suffering from falling stock prices. But thanks in part to capital injections of public funds in March, Mitsui has recovered. In the fiscal 1999 midyear results released in November, the bank claimed 34.3 billion yen in net business profits -- the third highest among the nation's seven trust banks and four times the figure reported by Chuo. In Monday's news conference, the top officials repeated that the move was intended to strengthen the new bank's sales and planning activities in response to the rapidly changing business environment, citing last year's announcements of major mergers by city banks. At one point, Mitsui's Furusawa became visibly upset because of repeated questions about what had prompted the decision and said, "Personnel decisions are not based on logic or reason." The new bank's management will be reshuffled after an annual shareholders' meeting in June. While Furusawa and Hirakawa are to remain in their prospective positions, Hisao Muramoto, a former Finance Ministry bureaucrat who was chairman of Chuo Trust until June, is tapped to become the new bank's chairman. In another move likely to boost Mitsui's say in the new bank, a second Mitsui official will join Hirakawa in a joint vice presidential capacity. The banks also announced that they will reduce the number of directors from the combined total of 44 at present to 18, with a further downsizing of the board of directors in mind. They will accelerate restructuring, cutting the number of regular manned branches from 166 to 100. To replace them, they will open smaller, less costly branches, such as outlets inside department stores. The workforce will also be significantly reduced. The two banks had originally planned to reduce their combined workforce from 10,000 to 8,300 by March 2005, but they now plan to slash the combined total to 7,000 by the same time.