Govt, BOJ Team Up to Promote Regional Bank Realignment

Economy Politics

Tokyo, Nov. 16 (Jiji Press)--The Japanese government and the Bank of Japan are deepening their cooperation to facilitate business integration among regional banks in the country, one of major policy themes of Prime Minister Yoshihide Suga, who took office in September.

The Financial Services Agency and the central bank are both taking rare measures in line with the policy of Suga, who has said that the country has “too many regional banks.” But the effects of the measures are unclear, with Yoshio Suzuki, president of Shimane Bank <7150>, operating in Shimane Prefecture, western Japan, saying that the measures “will not give a push for bank consolidation in any way,”

The BOJ said last week that it will offer an additional interest rate of 0.1 pct on current account deposits held at the central bank by regional banks that have decided on business integration, as a special measure in place until the March 2023 end of fiscal 2022. It is very unusual for the BOJ to implement a step aimed at prompting financial institutions to make a specific management decision.

The FSA plans to launch in summer 2021 a program to provide regional lenders with financial aid to help them cover about one-third of initial costs related to business integration, such as for system investments and branch consolidations, using retained earnings at Deposit Insurance Corp. of Japan.

Also, a special law that makes regional banks seeking to integrate operations exempt from the antimonopoly law if certain conditions are met is set to go into force on Nov. 27.

[Copyright The Jiji Press, Ltd.]

Jiji Press