Japan’s regional bank consolidation ‘inevitable’ as BOJ’s prolonged ultraeasy policy hurts profits: FSA

The Bank of Japan’s radical stimulus program, which has pushed interest rates to near or below zero, is severely cutting into bank profits and could destabilize the sector in the not so distant future, said FSA adviser Naoki Ohgo.

“There are only a handful of regional banks successfully making money in niche areas,” while many others are struggling to find new business models, Ohgo said in an interview Friday.

More regional banks should consolidate not only to cut costs, but also to restructure their businesses and boost profitability, he said.

“Consolidation is inevitable and a good thing,” Ohgo said.

The remarks are one of the most blunt warnings among financial regulators of the dire prospects for Japan’s crowded regional banking sector, underscoring the challenges smaller banks face in surviving a business environment made difficult by years of ultralow interest rates.

“There’s not much time left” for regional banks to take steps to survive the graying of society and dwindling margins, said Ohgo, a private consultant who also advises several local governments.

Unless regional banks boost profitability, it “might not take long” for prolonged ultraeasy policy to destabilize the banking sector, he said.

Ohgo is a close associate of FSA Commissioner Nobuchika Mori, who has called for speedier banking-sector reform and is considered a candidate for BOJ governor.

Prime Minister Shinzo Abe on Monday called for boosting the country’s defenses in the face of North Korean threats, warning that Tokyo needs to be able to protect itself. (Japan Times)

Further consolidation among Japan’s regional banks is inevitable given the rapidly aging population and ultralow interest rates, according to an adviser to the Financial Services Agency. (Japan Times)

About 300 passengers were evacuated after a fire spread to a train from a nearby building in central Tokyo on Sunday. (Jiji)

The 65-year-old owner of a small Japanese restaurant in Miyazaki city was stabbed to death on Saturday, police said. (Japan Today)

A stone monument has been unveiled near a levee that collapsed 2 years ago on the Kinugawa River, north of Tokyo. (NHK)

Mitsuoka Motor Co Ltd has unveiled its Fusion sleeping/funeral car based on minivans. (Japan Today)

Japan’s defense minister says North Korea has sufficient capabilities to be recognized as a nuclear power. (NHK)

Reflecting the recent rise of alpine accidents amid the trekking boom in Japan, experts advise hikers to get insurance covering search and rescue expenses, which can be hugely expensive. (Japan Today)

American songstress Katy Perry is known around the world for her hit songs, extravagant costumes, and her bad blood with fellow singer Taylor Swift. Here in Japan, though, the 32-year-old performer is becoming known for her love of local reed diffusers and fabric softeners, thanks to a new commercial being broadcast to television screens around the nation from 8 September. (Japan Today)

A 24-year-old male professional dancer was arrested after stealing a taxi in Tokyo and injuring the 41-year-old male driver, police said Saturday. (Japan Today)

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