CELEX: 31995M0596
Language: en
Date: 1995-07-17 00:00:00
Title: COMMISSION DECISION of 17/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.596 - Mitsubishi Bank / Bank of Tokyo) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0596

COMMISSION DECISION of 17/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.596 - Mitsubishi Bank / Bank of Tokyo) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 198 , 02/08/1995 P. 0005

  COMMISSION DECISION of 17/07/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.596 -  Mitsubishi Bank / Bank of Tokyo) according to Council  Regulation (EEC) No 4064/89   (Only the English text is authentic).   The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties  Dear Sirs,  Subject :<ind> Case No IV/M.596  Mitsubishi Bank/Bank of  Tokyo  <ind> <ind> Notification of 14 June 1995 pursuant to Article  4 of Council Regulation No 4064/89  1.<ind> On 14 June 1995 the Mitsubishi Bank Limited and the  Bank of Tokyo Limited notified to the Commission an  agreement, according to which both undertakings will enter  into a full merger.  I.<ind> THE PARTIES AND THE OPERATION  2.<ind> The Mitsubishi Bank Limited is a Japanese universal  banking institution whose scope of activities includes  retail banking, corporate banking, investment banking and  asset management services. Although it is mainly active in  its domestic market, Japan, the Mitsubishi Bank also  operates abroad with branches or subsidiaries in 27  countries in the Americas, Europe and the AsianPacific  region.  3.<ind> The Bank of Tokyo Limited is also a Japanese credit  institution whose activities include inter alia commercial  banking, investment banking and lease finance. The Bank of  Tokyo has extensive international operations, in particular  in North America, but is also active in the Pacific region,  Europe, Africa, the Middle East and Latin America.  4.<ind> The operation will be a full merger on an equal  basis by which the two banks will be replaced by "The Bank  of TokyoMitsubishi Ltd.".  II.<ind> CONCENTRATION  5.<ind> The merger between two previously independent  undertakings, the Bank of Tokyo Ltd. and the Mitsubishi Bank  Ltd., constitutes a concentration in the sense of Article  3(1)(a) of the Merger Regulation.  III.<ind> COMMUNITY DIMENSION  6.<ind> The combined aggregate worldwide turnover of the  undertakings concerned, calculated in accordance with  Article 5(3)(a) of the Merger Regulation, exceeded 5,000  Million ECU in the last financial year (one tenth of total  assets of the Bank of Tokyo amounts to 22,493 Million ECU  and of the Mitsubishi Bank amounts to 40,040 Million ECU).  Both the Bank of Tokyo and the Mitsubishi Bank have a  Communitywide turnover in excess of 250 Million ECU but do  not achieve more than twothirds of their aggregate  Communitywide turnover in one and the same Member State. The  operation therefore has a Community dimension.  IV.<ind> COMPATIBILITY  7.<ind> There are seven EU countries in which both the Bank  of Tokyo and the Mitsubishi Bank have established branches  or subsidiaries, namely in Belgium, France, Germany, Italy,  the Netherlands, Spain and the UK.  <ind> The main activity carried out by the two banks in the  abovementioned countries is related to corporate (wholesale)  banking. In addition to this main activity both banks also  carry out within the EU activities related to money markets  operations, foreign exchange trading and derivatives  trading.  8.<ind> Corporate (or wholesale) banking deals with  different kinds of loans and advances provided to corporate  entities including those made in connection with  international exports. This activity is predominantly  national in scope since it usually requires a close  relationship between a bank and its clients in order to best  taylor the funding to the particular needs of the clients.  However, in the present case in no country within the EU  will the combined lending activity of both banks exceed a  [Deleted business secrets: less than 5%.] market share.   9.<ind> The money market is a market for shortterm (less  than one year) loans. In fact, it constitutes a web of  several interlinked markets in different financial  instruments which can be used inter alia by banks to finance  temporary reserve shortages, by governments to bridge the  gap between tax receipts and expenditures and by securities  brokers and dealers to finance their inventories of  securities.  <ind> A supplier of funds to the money markets can be  virtually anyone with a temporary excess of funds. Loans  made on the money markets may be either call or time loans.  A "call loan" is a loan made on a demand basis, which means  it is payable at any time either the borrower or the lender  wants to terminate it. When only the lender can terminate  the loan at will these loans are designated as "call money".  Time loans are those which are made for a definiteperiod of  time.  <ind> At least with regard to call loans and call money the  money markets can be considered as global markets, since  they usually consist of an international network of  operators doing business by telephone, telex or screen based  communications.  <ind> European money market operations of both banks mainly  comprises call loans and call money. It is very difficult to  present accurate market shares for these markets but the  parties estimate that based on call loans and call money  statistics in the three major stock exchanges in the world  (New York, London and Tokyo) the Bank of Tokyo and the  Mitsubishi Bank have a combined market share of about  [Deleted business secrets: less than 10%.].  10.<ind> Foreign exchange deals comprise agreements between  two parties to exchange one currency for another at an  agreed rate and on an agreed date. There are two broad  categories of foreign transactions  outright transactions  and swap transactions. Outright foreign exchange  transactions include spot transactions and forward  transactions.  <ind> The greatest volume of foreign exchange transactions  are spot transactions. By convention the value date is two  business days after the deal is done. A forward exchange  contract is a deal which specifies the amount of one  currency which is to be exchanged for another at a future  date, the exchange rate being set when the deal is made. The  majority of forward foreign exchange transactions have a  duration of one year or less.  <ind> A foreign exchange swap transaction is the  simultaneous purchase and sale of the same amount of a given  currency for two different dates against the sale and  purchase of another.  <ind> The geographic scope of the foreign exchange markets  is global and exact figures concerning the size of the  market are difficult to obtain. However, based on  information provided for the five main financial centres  worldwide (Tokyo, New York, London, HongKong and Singapore),  the parties estimate that their combined market share for  all types of foreign exchange transactions does not exceed  [Deleted business secrets: less than 10%.].  11.<ind> Both parties are also active in derivatives trading  in particular in two kinds of derivatives contracts, namely  interest rate swaps and currency swaps.  <ind> An interest swap is a transaction in which two  counterparties exchange interest payment streams of  differing character based on an underlying notional  principal amount.  <ind> A currency swap is a transaction between two or more  parties to exchange interest obligations (payments of  interest on borrowings) or interest receipts (investment  income) between two different currencies.  <ind> The geographic scope of these activities is also  global and the parties estimate that their combined market  share would not exceed [Deleted business secrets: less than  15%.] worldwide.  V.<ind> CONCLUSION  12.<ind> Prior to the merger the Mitsubishi Bank was ranked  6th in the world both in terms of assets and capital while  Bank of Tokyo was ranked 18th in terms of capital and 21st  by assets. The merger of these two undertakings will produce  the largest bank in the world by either measure (capital and  assets). However, the great majority of the business of both  banks is done outside the Community and thus the primary  effects of the merger will be outside the Community.  13.<ind> Based on the above findings, the Commission has  come to the conclusion that the proposed concentration does  not raise serious doubts as to its compatibility with the  Common Market.  <ind> For the above reasons, the Commission has decided not  to oppose the notified operation and to declare it  compatible with the common market and with the functioning  of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No  4064/89.  For the Commission,