FSA to step up surveillance of Japanese banks showing signs of stress

Wednesday 28 August 2019 11:00 CET | News

The Financial Services Agency (FSA), Japan’s financial regulator, has announced plans to step up surveillance of local banks that show signs of stress.

Among announced actions, the regulator mentioned on-site inspection and administrative punishment when banks post continuous deficit or their capital adequacy ratio drops below 4%. The decision came as the environment around regional banks has become increasingly severe, with regional banks required to establish a sustainable business model and secure financial health, Reuters cited from the authority’s report.

The FSA also said it would consider lowering the deposit insurance rate for financially robust banks in a move to drive consolidation among regional lenders. Now, all domestic financial institutions are required to reserve a deposit insurance fee of 0.033% to hedge against bankruptcy. With the change, Japan’s financial regulator would require different rates depending on a bank’s financial health, measured by factors such as the size of its core capital.

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Keywords: Japan, banks, financial services, financial health, Financial Services Agency, FSA
Countries: World

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