Plans for a merger among three of Japan's largest banking companies are moving forward, but observers said such a deal would do little to solve deep-seated problems in the country's banking system.

Dai-Ichi Kangyo Bank, Fuji Bank, and Industrial Bank of Japan -- the country's No. 2, 6, and 7 banks -- confirmed Thursday that they are in talks. Japanese banking sources in New York said the companies are expected to unveil details of a planned merger today.

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