Japan FSA to Deregulate for Regional Bank Realignment


Tokyo, Aug. 28 (Jiji Press)--Japan's Financial Services Agency will promote the realignment and management improvement of regional financial institutions through deregulation and oversight measures to ensure their profitability, according to an outline of its fiscal 2019 administrative policy published Wednesday.

The policy goals include boosting banks' financial strength by easing restrictions on cross-holdings of shares among institutions to facilitate investment.

The FSA will also seek to loosen regulations limiting banks' investments in companies to 5 pct, which prevent regional banks from diversifying their business and engaging in activities that lead to regional revitalization.

The outline stressed "the need forcefully to promote initiatives to balance the execution of financial intermediation functions and the guarantee of management soundness," as regional banks find themselves in harsh business environments due to the Bank of Japan's negative interest rate policy and population declines.

According to the outline, the agency also plans to utilize the recently revised early warning system, in which the FSA pre-emptively calls for improvements before banks enter financial distress and takes strict administrative actions if the demands are not met.

[Copyright The Jiji Press, Ltd.]

Jiji Press