EXCLUSIVE: Japan to Stop Buying Banks’ Cross-Shareholdings

Tokyo, Dec. 24 (Jiji Press)–The Japanese government plans not to extend the deadline for Banks’ Shareholdings Purchase Corp. to purchase shares and exchange-traded funds held by banks, given the current market environment, Jiji Press learned Wednesday. The government will forgo submitting a bill to revise related laws for an extension of the deadline, currently set at the end of March 2026, during next year’s ordinary parliamentary session, informed sources said. The government-backed organization is expected to effectively complete its role in addressing the fallout from the financial crisis triggered by the collapse of U.S. investment bank Lehman Brothers in 2008. Banks’ Shareholdings Purchase Corp. was established in 2002 by private financial institutions under government leadership to prevent a decline in stock prices caused by the unwinding of cross-shareholdings. The entity buys stocks and ETFs held by banks and gradually sells them on the market. As of November this year, its cumulative purchases of such financial products reached about 3.6 trillion yen. Purchases were suspended in 2006 but resumed in 2009 to prevent banks’ deteriorating financial health caused by falling stock prices following the financial crisis from leading to a credit crunch. Since then, the deadline for purchases has been repeatedly extended, partly to support reductions of cross-shareholdings from the viewpoint of strengthening corporate governance. While this year’s stock market was once clouded by uncertainty due to high tariffs imposed by U.S. President Donald Trump, Japan’s benchmark Nikkei 225 stock average has risen above 50,000. Given the current market trend and the organization’s recent purchases of cross-shareholdings, the government is believed to have decided not to extend the deadline. “There will be little impact even if purchases are suspended,” a banking industry official said. The organization is expected to continue operations through March 2036 at the latest, as it needs time to dispose of its shareholdings. Attention is likely to focus on whether the government can use proceeds from these sales immediately as financial resources. END [Copyright The Jiji Press, Ltd.]