EXCLUSIVE: Japan FSA to Investigate Bank Loans for Property Investments

September 20, 2018

Tokyo- Japan's Financial Services Agency plans to investigate loans extended by banks for investments in properties, such as apartments, informed sources said Wednesday.

The FSA move is aimed at preventing document tapering and lending irregularities related to real estate investments similar to cases found at Suruga Bank, based in Numazu, Shizuoka Prefecture.

The agency will specifically scrutinize ways major and regional banks screen loan applications linked to property deals and see if they are offering individual customers lending for real estate investments and collateral-free loan products in a bundle, the sources said.

The agency will promptly launch on-site inspections when necessary, they added.

At Suruga Bank, a number of employees were found to be involved in falsifying loan-related documents chiefly in share house investment cases, such as padding applicants' annual income and disguising applicants as having a certain amount of funds at hands, so they can extend loans beyond borrowers' repayment capacities.

In order to meet excessively high performance goals set by the bank, its employees were also engaging in the bundle sales activities, according to recent findings by a third-party investigation panel. Jiji Press