* Aozora, Shinsei in talks to form Japan's 6th biggest bank
* Shares of Aozora, Shinsei jump more than 5 percent
TOKYO, June 25 (Reuters) - Aozora Bank and Shinsei Bank, hurt by soured investments and exposure to subprime loans, said on Thursday they are in talks to merge, in a deal that would create Japan's sixth-largest bank.
It was the first time the two money-losing lenders have confirmed the talks, after sources told Reuters last month that the banks were discussing a merger.
"Shinsei Bank acknowledges that while the two banks are currently in discussions with regard to their future, Shinsei has no comment at this time," Shinsei Bank said in a statement.
The two formerly nationalised banks plan to merge operations next year and make an announcement as soon as early July, public broadcaster NHK and Kyodo News Agency said.
Aozora is majority-owned by U.S. firm Cerberus Capital Management, and Shinsei is one-third owned by buyout firm JC Flowers and Co.
Shares of Shinsei had jumped 5.5 percent to 153 yen by 0029 GMT while Aozora shares climbed 5 percent to 146 yen. The benchmark Nikkei 225 index rose 0.8 percent. (Reporting by Mayumi Negishi; Editing by Chris Gallagher)