Regional banks rank 11th as new merger moves emerge amid rising interest rates

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Fri May 15, 2026 12:20 pm JST Feature

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According to the "Popular Theme Rankings" compiled by Minkabu and Kabutan, "Regional Banks" ranks 11th.

Interest rates have been rising both domestically and internationally. Against the backdrop of inflation concerns stemming from the Middle East, Japan's long-term interest rates have risen to the 2.7% level, reaching their highest level in 29 years. For banks, rising interest rates increase lending interest income. However, the Tokyo Stock Exchange's Banking sector index peaked in mid-February and has since remained mostly flat. Rising interest rates also mean falling prices for bond holdings, which carries the risk of valuation losses. While regional banks with strong financial standing are being favorably evaluated, interest in others remains limited.

Amid this environment, regional bank reorganization has accelerated. On May 13, San ju San Financial Group <7322> and Aichi Financial Group <7389> announced a basic agreement on a business integration. In the Chubu region, Shizuoka Financial Group <5831> and The Bank of Nagoya <8522> also announced a basic agreement on business integration in March.

In Aichi Prefecture, where many companies have strong financial structures, lending rates tend to be suppressed. Due to the existence of so-called "Nagoya rates," the competitive environment in the Chubu region has historically been fiercer than the national average. Beyond Chubu, activists have recently moved to acquire large stakes in regional banks, and market pressure to improve capital efficiency is intensifying. Results for regional banks have been notably strong, and investors are watching to see if sentiment will continue to improve.

Regional bank stocks were generally firm in the Tokyo market on the 15th. The Chiba Kogyo Bank <8337>, The Shiga Bank <8366>, and Hachijuni Nagano Bank <8359> all traded steadily.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.