The two institutions were negotiating a "comprehensive tie-up," including a possible merger and the establishment of a holding company in the future," said the Nihon Keizai Shimbun report. "An agreement is expected to be reached as early as the end of this month," it said quoting banking sources.

A merger would create a bank with assets of 90 trillion yen (786 billion dollars), exceeding those of Japan's largest, Bank of Tokyo-Mitsubishi Ltd, it said. Japan's two largest trust banks were examining the possibility of integrating their computer systems and operations such as custody services and securities agency work, said the report.

Neither of the two trust banks would confirm the report, with officials from each saying they would issue statements later in the day.