Japan to Enhance Oversight of Local Banks Backed by Public Funds

Tokyo, Dec. 5 (Jiji Press)--The Japanese government plans to strengthen the oversight of regional lenders that have received public funds, or taxpayer money, to improve their financial standings.

The Financial System Council, which advises the prime minister, broadly approved at a working group meeting Thursday a draft of a report on measures to reinforce the functions of regional financial institutions.

The planned strengthening of the monitoring of regional banks recapitalized with public funds reflects a scandal at Iwaki Shinkumi Bank in the city of Iwaki, Fukushima Prefecture, northeastern Japan.

The lender was found to have provided funds to antisocial forces. Iwaki Shinkumi received 20 billion yen in public funds in 2012, after the March 2011 powerful earthquake and tsunami, which mainly struck the Tohoku northeastern region, including Fukushima.

Meanwhile, the government will increase grants provided for mergers of local banks, in order to support the realignment of the regional banking industry.

[Copyright The Jiji Press, Ltd.]