The two companies announced the merger plan in July, saying the combined entity would be Japan's sixth-largest bank with assets of about 18 trillion yen ($200.7 billion).
However, Japan's leading Nikkei business daily said Saturday the banks have been unable to bridge differences over management policy or come up with a growth strategy. Kyodo News agency also reported they are at odds over how to integrate their banking systems, and what their core banking business should be.
The Nikkei quoted executives it did not identify from both banks for its report. Kyodo quoted sources it did not name.
Kyodo said if agreement cannot be reached, the banks may drop the merger and pursue independent paths. The Nikkei said the banks are considering whether to call off the merger or postpone it indefinitely.
Shinsei Bank said in a statement on its Web site it had no comment. Aozora Bank could not immediately be reached.
A group of investors, including affiliates of U.S. private equity firm J.C. Flowers & Co., holds a 32.5 percent stake in Shinsei, while an entity of Cerberus Capital Management, LP, also of the U.S., owns 45.5 percent of Aozora shares, according to information posted on the Web sites of the two banks.
