Sumitomo Mitsui, on the other hand, would risk a political uproar by exercising the option.
ECONOMIST: A curious proposal by one of Japan's biggest banks
Still, some reckon that a bid could prove a politically astute move for Sumitomo Mitsui.
ECONOMIST: A curious proposal by one of Japan's biggest banks
China Construction Bank and Sumitomo Mitsui are among those considering buying Rabobank's Indonesian subsidiary.
By offering to take on Aozora, Sumitomo Mitsui might be calculating that it is building up political, not financial, capital.
ECONOMIST: A curious proposal by one of Japan's biggest banks
The stocks of Mitsubishi UFJ Financial Group (NYSE:MTU) are up 65% and those of Sumitomo Mitsui Financial Group (NYSE:SMFG) up 75%.
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Last month, for example, RBS agreed to sell its aircraft-leasing unit to a group led by Japan's Sumitomo Mitsui Financial Group Inc.
It is reported that the transaction is being funded entirely by loans from four banks: Mizuho Financial, Sumitomo Mitsui Financial, Mitsubishi UFJ and Deutsche Bank.
Sumitomo Mitsui is not the only big bank making odd moves.
ECONOMIST: A curious proposal by one of Japan's biggest banks
Toyota Motor (TM), Canon (CAJ) and Sumitomo Mitsui Financial Group (SMFG).
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Banking shares were among the gainers in Japan, with Sumitomo Mitsui Financial Group up 2.2%, Mizuho Financial Group up 2.9% and Nomura Holdings 2.8% higher.
Sumitomo Mitsui Financial Group aims to take advantage of Japan Inc.
Last week Mitsui Mutual, the weakest of the seven, joined in an alliance with Sumitomo Mitsui Bank, Sumitomo Life and Mitsui Sumitomo Insurance, a non-life insurer.
"This is a positive for the economy in the sense that it prevents the yen from rising, " said Hiroaku Muto, senior economist at Sumitomo Mitsui Asset Management.
The FSA's new requirement, likely to be phased in from 2016, is expected to cover major trust banks, such as Sumitomo Mitsui Trust Bank and Norinchukin Bank.
"The first reaction was to buy the dollar while selling the euro, the South Korean won and Asian shares, " said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.
Consumer and small-business loans would account for roughly 60% of the merged bank's domestic total, about the same as at Mizuho and Sumitomo Mitsui Financial Group, the other big-four bank.
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It is not clear how effective the move will be, though: Sumitomo Mitsui Bank has massive bad debts of its own and has yet to commit fresh funds to Mitsui.
Formerly great names like Sumitomo, Mitsui, and Mitsubishi as well as outfits less well known outside Japan like Yasuda, Furukawa and Nakajima have faded into the background on the international scene, outmaneuvered and outplayed by younger nimbler firms in Japan as well as by American and European companies.
Large trading corporations, such as Mitsubishi, Mitsui and Sumitomo, or large companies, such as DoCoMo, do make strategic acquisitions of established young companies.
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REITs offer investors a middle way between the high-risk, high-return vulture funds and stodgy, low-return Japanese property developers, such as those attached to the Mitsubishi, Mitsui and Sumitomo keiretsu.
Itoh, Mitsui, Mitsubishi, Nippon Steel, NKK Corporation, Sumitomo Metal Industries and Kawasaki Steel Corporation, have been adversely affected.
Sakura Bank (which recently announced a merger with Sumitomo) is strong in Thailand, thanks to its role as financier to the Mitsui group of companies.
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