FSA sees insufficient aid by regional banks to weak firms

September 9, 2017

TOKYO- Japan's Financial Services Agency has drafted a report that regional banks tend to be reluctant to provide financing support to client companies in bad financial conditions, informed sources said Friday.

Seeing that the tendency represents financial exclusion typical in Japan, the FSA will urge regional banks to correct the problem, the sources said.

The view is based on a survey of some 30,000 companies nationwide, of which 8,900 gave valid responses. The survey results will be included in the report, which the FSA will publish in the near future.

According to the survey, some 80 percent of highly creditworthy companies receive visits from officials of creditor regional banks on a regular basis, against 60 percent for firms with lower creditworthiness.

About 70 percent in the highly creditworthy camp said they have received fresh loans when they faced financing difficulties, far higher than 30 percent for companies with lower creditworthiness.

The draft report also said more than half of the country's regional banks incurred losses on their mainline operations including lending and financial product sales in the latest year ended in March this year.

This shows that the profitability at regional lenders is deteriorating faster than previously thought. Last year, the FSA predicted that the share of regional banks losing money on the mainline operations would reach 60 pct in the year ending in March 2025. Jiji Press