	sumitomo bank aims at quick recovery from merger sumitomo bank ltd sumi t is certain to lose its status as japan s most profitable bank as a result of its merger with the heiwa sogo bank financial analysts said osaka based sumitomo with desposits of around trillion yen merged with heiwa sogo a small struggling bank with an estimated billion dlrs in unrecoverable loans in october but despite the link up sumitomo president koh komatsu told reuters he is confident his bank can quickly regain its position we ll be back in position in first place within three years komatsu said in an interview he said that while the merger will initially reduce sumitomo s profitability and efficiency it will vastly expand sumitomo s branch network in the tokyo metropolitan area where it has been relatively weak but financial analysts are divided on whether and how quickly the gamble will pay off some said sumitomo may have paid too much for heiwa sogo in view of the smaller bank s large debts others argue the merger was more cost effective than creating a comparable branch network from scratch the analysts agreed the bank was aggressive it has expanded overseas entered the lucrative securities business and geared up for domestic competition but they questioned the wisdom of some of those moves they ve made bold moves to put everything in place now it s largely out of their hands said kleinwort benson ltd financial analyst simon smithson among sumitomo s problems are limits placed on its move to enter u s securities business by taking a share in american investment bank goldman sachs and co sumitomo last august agreed to pay mln dlrs for a pct limited partnership in the bank but for the time being at least the federal reserve board has forbidden them to exchange personnel or increase the business they do with each other the tie up is widely looked on as a lame duck because the fed was stricter than sumitomo expected said one analyst but komatsu said the move will pay off in time u s regulations will change in the near future and if so we can do various things we only have to wait two or three years not until the st century komatsu said komatsu is also willing to be patient about possible routes into the securities business at home article of the securities and exchange act japan s version of the u s glass steagall act separates commercial from investment banking but the walls between the two are crumbling and komatsu said he hopes further deregulation will create new opportunities we need to find new business chances komatsu said in some cases these will be securities related in some cases trust bank related that s the kind of deregulation we want until such changes occur sumitomo will focus on such domestic securities business as profitable government bond dealing and strengthening relations with meiko securities co ltd in which it holds a five pct share komatsu said he said sumitomo is cautiously optimistic about entering the securities business here through its swiss universal bank subsidiary banca del gottardo the finance ministry is expected to grant licences to securities subsidiaries of u s commercial banks soon following a similar decision for subsidiaries of european universal banks in which the parent holds a less than pct but komatsu is reluctant to push hard for a similar decision on a gottardo subsidiary we don t want to make waves we expect this will be allowed in two or three years he said like other city banks sumitomo is also pushing to expand lending to individuals and small and medium businesses to replace disappearing demand from big business he added the analysts said sumitomo will have to devote a lot of time to digesting its most recent initiatives including the merger with ailing heiwa sogo it s sumitomo been bold in its strategies said kleinwort s smithson after that it s a question of absorbing and juggling around it will be the next decade before we see if the strategy is right or wrong reuter 
