DAIWA Bank yesterday appeared to cast doubt on a merger with Sumitomo, its Japanese rival, Mr Takashi Kaiho, Daiwa's president, said a merger was still one option, but he had no detailed ideas about such a link up.

He was speaking a day after the bank was fined a record $340 million (£215.77 million) in the United States for concealing a $1.1 billion unauthorised bond trading loss from American regulators.

As a consequence of the bond trading scandal, which forced Daiwa to close all its operations in the US, the Japanese bank was believed to have accepted a merger with Sumitomo as a way out of its crisis.

In accepting its punishment for covering up huge trading losses by a rogue bond trader over 11 years, Daiwa gave sat is faction to indignant US regulators and itself avoided a lengthy trial. Mr Kaiho also said Daiwa would be able to post profits for current fiscal year ending March 31st.