Japan Mulls Easing Information Firewall for Banking Industry
Tokyo, May 25 (Jiji Press)--The Japanese government is stepping up discussions on whether to ease a firewall rule that bans the sharing of customer information across banking groups' commercial banking and investment banking businesses.
While megabanks with brokerage subsidiaries are pressing for deregulation or abolition of the rule, independent securities companies are demanding that the rule be maintained.
The firewall rule was introduced in 1993 when commercial and investment banks were allowed to enter each other's business turf through subsidiaries, in order to prevent banking groups from exercising strong influence over the client companies that they lend money to.
Currently, such sharing of nonpublic information is allowed with the consent of the client but is prohibited in principle--a rule that is not seen in the United States and in Europe.
A council of the Financial Services Agency is discussing abolition for the rule, which megabanks say would allow them to offer a wider variety of financing services to help make client companies more competitive, such as a combination of loans and the issuance of corporate bonds.
[Copyright The Jiji Press, Ltd.]