3 days ago
FSA eager to back regional bank realignment
Financial Services Agency Commissioner Yutaka Ito has expressed eagerness to support the realignment of regional banks to enhance financial services in Japan.
"We will do our best to support consolidations and mergers if they contribute to the provision of high-quality regional financial services," Ito said in a recent interview.
Ito, who took office in July, stressed that cooperation with nonfinancial businesses is also crucial for the management of regional lenders.
"In order to make the management foundation sustainable, options such as reorganization, standardization of operations and collaboration with nonfinancial businesses should be considered," he said.
Although financial institutions' profits are improving thanks to interest rate hikes by the Bank of Japan, the environment surrounding such institutions "will change rapidly from now on," Ito said, claiming that they "need to make management decisions now."
The FSA plans to draw up a program to strengthen regional financial capabilities by the end of this year, which will include the extension and expansion of the public fund injection system.
Ito showed eagerness to establish a backup system to maintain financial functions in the event of natural disasters.
He also expressed his intention to improve the subsidy system that can be used on the occasions of mergers and business integrations.
Meanwhile, malicious fraudulent loans have been discovered at regional credit cooperative Iwaki Shinkumi Bank in Fukushima Prefecture where public funds were injected after the March 2011 major earthquake and tsunami.
"We need to ensure appropriate business operations," Ito said. "At the minimum, we have to conduct business management and prevent fraudulent practices at institutions in which we have equity participation."
In recent years, there have been a series of scandals in the financial industry, such as illicit automobile insurance claims and safe deposit box thefts.
"If we take superficial measures, problems will arise again," Ito said, calling for reforms after finding out the root causes.
