Japan plans rule change to encourage regional bank consolidation: Nikkei

TOKYO (Reuters) – Japan’s government plans to change anti-monopoly rules to encourage the consolidation of regional banks as profits fall due to years of ultra-low interest rates and a shrinking population, the newspaper reported on Tuesday.

The changes will be part of a government growth strategy to be announced this summer, and reflect Prime Minister Shinzo Abe’s desire to enhance transparency on rules for bank consolidation, the newspaper said.

The government plans to introduce legislation that will provide for exemptions to Japan’s anti-monopoly law and allow regional banks to consolidate more easily, the paper said, without citing sources.

The exemptions will be in effect for five or 10 years and banks will be encouraged to consolidate within that time frame, the paper said.

The government hopes to submit the legislation to parliament next year, the Nikkei said.

The government is debating changes to anti-trust regulations for banks, but has not decided whether it will submit any bills to parliament, a government official with direct knowledge of the matter told Reuters.

Some regional banks have faced difficulty consolidating under the current anti-monopoly law, which focuses on ensuring there is competition even in regional areas with a declining population.

Japan’s roughly 100 regional banks are grappling with diminishing returns from their traditional lending business, affected by the Bank of Japan’s ultra-loose monetary policy and a dwindling population outside major cities.

BOJ Governor Haruhiko Kuroda has said the central bank will be mindful of the strain that the prolonged easing is having on financial institutions, which he added could merger or consolidate to improve their financial health.

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