export-japan.com's newsletter 9th August 2004 edition

Contents

UFJ Bank merger developments
UFJ
Sumitomo
MTFG

Last issue we brought you news of the possible merger of UFJ and Mitsuibishi Tokyo banks to form the world's largest bank. In reaction to this possible merger, Sumitomo Mitsui Financial Group have tabled a counter-merger offer.

Sumitomo Mitsui FG, Japan's 3rd largest bank, filed for a court injunction to halt the UFJ-Mitsuibishi Tokyo merger talks and then followed up with a proposal to merge with UFJ. Part of the proposal is a cash injection of 500 billion Yen (4.54 billion USD). UFJ is said to be interested in considering all its options, though it is generally thought it will accept Mitsuibishi-Tokyo's merger offer.

We will keep you informed of future developments as this battle of the banks heats up.

Japan's deflation trend continues
Fireworks

Despite eight straight quarters of economic growth Japan's six-year deflation trend continues. Governor of the Bank of Japan, Toshihiko Fukui, is blaming Japanese companies' desire to keep wages low for the continuing trend. Although productivity and profits are increasing for companies, there is no corresponding increase in wages so workers are less likely to accept price increases and so prices continue to remain static or fall.

Because of the continuing deflation, the Bank of Japan is expected to keep interest rates at close to zero percent to encourage borrowing and increase consumers' willingness to spend.

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Japan's Obon period

Although the Obon period (the time to pay respect to one's ancestors) is not officially marked on the calendar as a public holiday Japanese companies may be closed for 5 or 6 days between the 10th and 20th August depending on region.

Most companies will choose the period between the 12th and 16th this year, but if you do business with Japanese companies it is best to check to make sure when they will be closed and when they will re-open their offices.

For other business holidays you can check out our very own Japanese Business Holidays calendar

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