Banking industry analysts have not evaluated the planned Japanese mergers as favorably as these and other American and European tie-ups. Most obviously, the economies of scale and scope that often provide the motivation for U.S. banks to combine are not as compelling in Japan. There, nationwide commercial banks, as measured by assets, were so large a decade ago that they regularly were the subject of alarmist reporting in the American media, which pointed out that even Citibank and BankAmerica were puny in comparison with Japan's midtier city banks. Meanwhile, they invested far less in information technology. For Japanese banks to claim, as they do now, that they need to grow in order to afford the technology that American banks acquired years ago raises the question of why they missed the boat in the first place.
Japanese banks are even less likely to capture additional economies of scope.
Only in the past year have traveling Americans found the Bank of America name coast to coast and even then, not necessarily in-between. By contrast, the largest Japanese commercial banks for decades have operated a nationwide network of branches, however thin. In any event, with the advent of Internet banking, spreading automated teller machine networks and other technologies, geographic considerations rapidly are becoming irrelevant in both countries. Moreover, Japanese banks have not yet taken the plunge that might trigger a real revolution in how business is conducted. Equally important, big banks in Japan have yet to merge with nonbank financial companies, the prototype being Citigroup, which brought under one roof retail and investment banking, securities and insurance.