Japan Banks, Securities Firms Reviewing Sales of Structured Bonds


Tokyo, Sept. 18 (Jiji Press)--A number of Japanese banks and securities companies are reviewing their sales of structured bonds, a risky financial product involving a complicated combination of derivatives, following complaints from customers who were not sufficiently informed of the product's characteristics.

While structured bonds have a high risk for a loss of principal due to their high-yield nature, regional banks in the country stepped up sales of such products in recent years because of their attractively high kickbacks.

There thus have been cases in which inexperienced investors suffered losses from structured bonds that they bought without receiving enough explanations from financial institutions.

The Financial Services Agency presented a plan in late August to examine whether financial institutions are giving enough information when selling structured bonds to retail customers.

In August, Chiba Bank <8331> halted sales of structured bonds via s subsidiary, Chibagin Securities Co. Bank of Yokohama and Hiroshima Bank plan to partly stop sales of structured bonds, and there is a possibility of more regional banks following suit.

[Copyright The Jiji Press, Ltd.]

Jiji Press