The new entity will be named Sumitomo Mitsui Banking Corp. and will become the world's third-largest financial institution with assets of around 99 trillion yen ($936.17 billion).

One Sakura Bank share will be equal to 0.6 Sumitomo Bank shares. Sumitomo Bank President Yoshifumi Nishikawa will become president of the new bank, while Sakura Bank President Akishige Okada will serve as chairman.

The combination of Sumitomo and Sakura, unveiled late last year, would be significant not only for its size but also as another sign that the alliances that have held corporate Japan together for many decades are breaking down and new alliances are forming. Sumitomo is at the center of one of the nation's oldest corporate families, the Sumitomo group, while Sakura still maintains close ties with the Mitsui corporate family that used to be organized around Mitsui Bank.

Sumitomo and Sakura had originally said they planned to start functioning as "twin banks" with the same business structure by April 2001, and that the merger would follow by April 2002.

The recent acceleration in banking industry realignments prompted Sumitomo and Sakura to move forward the merger date, Sakura's Mr. Okada said at a press conference.

Indeed, their rival commercial banks are slated to integrate their operations within one year from now.

Dai-Ichi Kangyo Bank Ltd., Fuji Bank Ltd. and Industrial Bank of Japan Ltd. will create the world's largest financial institution, Mizuho Financial Group, this autumn.

Sanwa Bank Ltd., Tokai Bank Ltd. and Asahi Bank Ltd. will unify their businesses next April, while Bank of Tokyo-Mitsubishi Ltd. and two other listed Mitsubishi banks announced Wednesday they will set up a joint holding company in April 2001.

The Sakura Bank president said the new bank's name - Sumitomo Mitsui Banking Corp. - was selected "due to global recognition and credibility" of the two former conglomerate groups.

The consolidation is being driven by a sweeping deregulation of Japan's financial industry and moves by banks to finally deal with a mountain of bad loans from the decline of the country's economy and financial markets starting in 1990.

Sumitomo is the financially stronger bank of the two, and it has been faster to adapt to changing times. In 1995, it became the first Japanese bank to write off billions of dollars of bad loans. It was the first big Japanese bank to move into private banking, and it set a precedent in 1998 by hiring an outsider, former Citibank executive Tatsuo Kubota, to run its retail-banking division. Sakura, burdened by huge bad loans from the bubble era, was considered among Japan's shakiest banks until March, when the government came to the rescue with a capital infusion of 800 billion yen. Sumitomo received 510 billion yen at the same time.

Sumitomo's Mr. Nishikawa said the new bank has five main strategies: bolstering retail operations; strengthening fee businesses, such as securitization and structured finance, for corporate customers; reboosting overseas operations; spending active information technology investments; and becoming a leader in online banking.

-- The Wall Street JournalWhile Sumitomo Mitsui will spend around 100 billion yen per year for IT-related investments, rationalization effects through the merger are expected to total around 50 billion yen to 60 billion yen, Mr. Nishikawa said.As a result of the merger, the banks will cut total employees by 3,000 and branches by 100. Sumitomo and Sakura are also accelerating their own cost-cutting efforts based on their separate business plans submitted in March 1999 in return for public fund injections, they said. Sumitomo Mitsui will aim for 950 billion yen parent net operating profit, 1.150 trillion yen group net operating profit, a return-on-equity of more than 10%, an capital adequacy ratio of more than 11% in the fiscal year ending March 2005, Mr. Nishikawa said.As the banks have already taken aggressive bad debt write-off measures, annual credit-related costs will likely be less than 200 billion yen after the merger. Sumitomo Mitsui also hopes to return about half of its total 1.501 trillion yen public funds in five years, Mr. Nishikawa added.The new bank's headquarters will be based in Tokyo, with some main functions also remaining in Osaka, where Sumitomo Bank is currently based.Shares in Sumitomo Bank and Sakura Bank were traded actively Friday to adjust to their proposed merger ratio. Sakura Bank rose 32 yen to 762 yen while Sumitomo Bank fell 178 yen to 1,380 yen.