EXCLUSIVE: Japan FSA to Set Up Inspection Office

Tokyo, Aug. 20 (Jiji Press)–Japan’s Financial Services Agency is considering setting up an office to serve as a control tower for inspections of financial institutions, following a series of scandals at regional credit cooperatives, Jiji Press learned Thursday. Related expenses will be included in the agency’s upcoming budget request for fiscal 2027 starting next April. The inspection planning office will verify and improve inspection methods, work on medium- to long-term human resources development and give instructions on areas to be inspected intensively. The government’s financial strategy to promote growth investment, released last month, calls for strengthening inspection and supervision functions for regional financial institutions. The FSA is also considering assigning specialized inspectors to regional finance bureaus nationwide. In 2018, the agency abolished its Inspection Bureau, which played a major role in battling a bad loan crisis in the banking industry after the country’s bubble economy collapsed in the early 1990s. The abolition marked the FSA’s shift of focus to improving financial institutions’ profitability. However, a series of scandals came to light recently at “shinyo kumiai” cooperatives, also known as shinkumi banks. Iwaki Shinkumi Bank in Fukushima Prefecture was found to have provided funds to antisocial forces, while a former executive of Uri Shinkumi Bank in Hokkaido was found to have embezzled deposits. As both cases have resulted in partial business suspension orders, the agency faces an urgent need to improve its inspection system. END [Copyright The Jiji Press, Ltd.]