That is because it is not a merger between two bombed-out casualties of Japan's property lending binge clinging together for comfort but between two banks that for different reasons managed to avoid the worst of the excess.
Bank of Tokyo only recently shook off the long-term effects of the 1980s Third World debt crisis, which hit it hard. But it then took care to avoid new disaster areas, and never got deeply into domestic property lending. By its stolid conservatism, Mitsubishi Bank also escaped the worst of the losses that have crippled much of the Japanese financial system.
Clearly this is in no sense a rescue. The business logic of combining a domestic bank with an international one that specialises in foreign exchange and the bond markets makes good sense on paper.
It is, however, just possible that official encouragement for the deal is linked to more than the prospect of tougher competition inside Japan and a better deal for customers. The new group will be so big it could become an umbrella for smaller, weaker organisations.
Many other Japanese banks cannot yet afford to write off all their bad debts: if they did they would be bust. The painful process of providing for the debts is likely to be drawn out, in some cases, over 20 years or more.
Indeed, if you thought the Barings crisis was bad and Crdit Lyonnais worse, Japan's problems dwarf both, and perhaps even the $150bn US savings & loans collapse as well.
The difference between these events and the Japanese saga is the extent to which the close alliance between government, financiers and customers has allowed the banks to obscure the damage to their balance sheets in order to keep trading. So far only one of the top Japanese banks, Sumitomo, has been able to afford to make what by US and UK standards would be acknowledged as realistically large bad debt provisions.
The new bank was welcomed by Japanese business, where it will occupy a position at the centre of the Mitsubishi keiretsu - the Japanese term for a family of related businesses linked by cross-shareholdings but relying on the same powerful brand name.
These giant industrial families powered the Japanese economy in its two great periods of growth: in the early 20th century, when Japan grew from a feudal economy to an industrial power in a matter of decades; and in the triumphant recovery after the country's defeat in 1945.
Foreign companies often complain that the incestuous co-operation between Japanese companies acts as a barrier to free trade, and in the past few years analysts have detected a weakening of keiretsu ties, under the influence of international competition. The new merger, however, will give Mitsubishi companies more reason than ever for keeping it in the family.
In the short term this is a purely domestic affair. Japan is deregulating its banking industry, ending the distinctions between city banks, trust banks and long-term credit banks. It is also lowering the barriers between banks and securities houses. The new alliance will therefore create a universal bank, not unlike those we are used to in Europe.
The complexity of the merger is bound to force the new organisation to focus internally for a while. But ultimately it will have immense power in international markets. That will be no bad thing if London gets a share of any expansion in investment banking and securities.Reuse content