Mitsubishi Tokyo soared on expectations that a possible merger with UFJ will help it cut costs and gain more customers.
"A weaker bank tying up with a strong bank is surely great news," said Marc Desmidt, who oversees US$9.2 billion as head of investment at Merrill Lynch Investment Managers Co in Tokyo.
"Consolidation in the industry would mean more cost cutting, revenue growth and these sorts of things will create much more upside to their earnings."
Officials from the two lenders on Friday said the banks plan to merge by September 2005.
National Australia Bank Ltd, the nation's largest lender, plunged 8.1 percent.
The company on Wednesday said second-half operating profit may slump as much as 23 percent because increased competition and higher costs reduced income.
RSS