The Actual State of Branch Consolidation in Japanese Banks

Most of the closed bank branches in Japan are taken over by other branches in what is called as “branch-in-branch consolidation”. Thus, even if a physically existing branch is closed, the number of branches recorded in the statistics remains unchanged. In this report, we measure the number of physically existing branches from the location data of all financial institutions to gauge the actual situation of branch-in-branch consolidation. We also examine the factors that determine the number of bank branches, the extent to which regional banks and second-tier regional banks that are undergoing reorganization are consolidating branches and how much money they are saving by doing so. Furthermore, we analyze the network of inter-branch distances by graph theory to quantify how much room is left for branch consolidation. We also evaluate the stock market’s reaction of the capital alliance with Internet financial giant SBI Holdings, which has been attracting attention as a new form of regional bank reorganization.