Almost no-one outside Japan has noticed, but an unprecedented wave of mergers in the financial sector is about to hit the headlines.
The problems are simply stated: Japan has too many financial institutions, which make too little profit, have lots of bad debt (mostly unrealized), and which are still compartmentalized into categories fixed 50 years ago. But the situation is more serious than most people think. The bankruptcy of Nissan Life last month was a shock; more shocking was its admission that it had been operating for some years, with the knowledge of the ministry of finance, with negative equity.
The ministry is desperate to bail out other insolvent institutions. Since it can't do so publicly with taxpayers' money, it has found a back-door method. When holding companies are allowed (as they will be soon), they will be allowed to pay tax on a consolidated basis. If Fuji Bank, say, were to take over Yamaichi Securities (the most widely rumoured link) it could write off Yamaichi's losses against its own profits.
Analysts in Tokyo are convinced there will be a rush of such mergers, which will leave a small number of financial conglomerates controlling the Japanese markets.