Sumitomo, Daiwa May Combine Units

Sumitomo Bank Ltd. and Daiwa Securities Co.--Japan’s second-largest bank and brokerage--may combine their capital market and corporate client units in a joint venture, a Sumitomo Bank official said.

The companies will meet the press today to discuss their plans, a Daiwa Securities spokesman said. The directors of Osaka-based Sumitomo Bank have not made a formal decision on the joint venture and will discuss it at a meeting today, the bank official said.

Daiwa Securities’ very existence could hinge on an alliance with a stronger financial institution such as Sumitomo Bank, Daiwa’s main lender, analysts say. The brokerage’s capital has been eroded by two years of losses, and its bond ratings last week were cut to one notch above junk status by Standard & Poor’s Corp.