In one of the first moves on combining interests of U.S. and Japanese banks, Merrill Lynch & Co. and Japan’s second-biggest bank by assets, Mitsubishi Tokyo Financial Inc., have begun talks on merging their private-banking operations in Japan, a person familiar with the matter said. The parties are going to take equal shares in a future venture, locating its retail outlets in Mitsubishi Tokyo bank branches.

Both parties, Merrill and Mitsubishi Tokyo, refused to comment on the possibility of a deal.

Mitsubishi Tokyo, like most Japanese banks, conducts only a small private-banking operation, which meets the demands of wealthy individuals. Creating a union with Merill would promote Mitsubishi Tokyo’s strategy to turn into a financial company, offering retail customers everything starting from bank accounts to stock investments.

For U.S. investment banks, such changes may help increase their insignificant presence in Japan’s retail market. While Japan is regarded as a large potential market, since most Japanese still store their funds in bank accounts, many past efforts to enter were not successful.

For Merrill, that already possesses more than one trillion yen, or about $9.5 billion, in private-banking assets in Japan, creating a joint venture with Mitsubishi Tokyo would mean a less risky access to the Japanese bank’s huge retail presence. The deal might also convert into a broader alliance that would enable Merrill to offer merger-advisory services and securities underwriting to Mitsubishi Tokyo’s corporate clients.

For Mitsubishi Tokyo, a deal would help it comprehend Merrill’s expertise in complicated products like hedge funds and private-equity investments.