The Bank of Japan has decided to add credit unions, agricultural cooperatives, fishery cooperatives, etc. to the targets of the special system that provides funding and support to regional financial institutions that are working to improve and integrate management efficiency.
Regarding regional financial institutions, the government has a policy of introducing support measures to support integration, etc., and the government and the Bank of Japan will take steps along with unusual measures to financially support business integration.
The Bank of Japan's special system pays an annual interest rate of 0.1% on the current deposits deposited by regional banks with the Bank of Japan, and is intended for regional financial institutions that strengthen their management base through cost reductions and business integration.
In addition to regional banks and credit unions, the Bank of Japan has decided to add new credit unions, labor banks, agricultural cooperatives and fishery cooperatives to the target of this system.
The system is a three-year time-limited measure from this year to 2022, and the Bank of Japan wants to support efforts to strengthen the management base of regional financial institutions, which continue to face a difficult business environment.
Regarding regional financial institutions, the government also plans to establish a new system to support a part of the expenses required for mergers and business integrations, and the government and the Bank of Japan have taken unusual measures to financially support business integrations. Take a step forward.
What is a special system?
The special system introduced by the Bank of Japan is to pay an annual interest rate of 0.1% to the current account deposited by the regional financial institution with the Bank of Japan.
For financial institutions, simply depositing money with the Bank of Japan will increase the interest they receive.
This applies to regional financial institutions that work to strengthen their management base by "strengthening profitability and reducing expenses" and "management integration" while supporting the local economy.
Of these, for "strengthening profitability and reducing expenses", the ratio of expenses to gross profit of operations is used as an index, and for example, the improvement rate in 2022 compared to 2019 is 4% or more. will do.
Regarding "business integration," it is a condition that the BOJ recognizes that it will strengthen its management base by resolving mergers, business integrations, and making it a subsidiary at a general meeting of shareholders by the end of March 2023.
This system is a three-year time-limited measure from this year to 2022.
According to the Bank of Japan, if the special system is applied to all regional financial institutions, including credit unions, agricultural cooperatives and fishery cooperatives, the financial institutions will receive more than 70 billion yen annually.
The government also promotes environmental improvement
In order to support the integration of regional financial institutions, not only the Bank of Japan but also the government is improving the environment.
One of these is the introduction of a new system that supports some of the expenses required for mergers and business integrations.
When a regional financial institution whose main business base is in a region facing a declining population decides on a merger or business integration, it will subsidize part of the necessary expenses such as system investment up to about 3 billion yen.
At the time of integration, it may cost a lot of money to standardize the system, and the government will subsidize a part of the cost to create an environment where the reorganization will proceed.
In addition to these financial support measures, on the 27th of last month (November), there is a special law that excludes the application of the Antimonopoly Act if certain conditions are met even if the loan share in the region increases due to a merger. It was enforced.
This has lowered the hurdles for restructuring regional financial institutions within the same region.
With the government and the Bank of Japan launching a series of systems to support the integration of regional financial institutions in a coordinated manner, the focus will be on whether or not the reorganization will actually proceed in the future.
The perception of local banks
While there are voices among regional banks that they would like to positively consider the use of support measures introduced by the government and the Bank of Japan in order to support the integration of regional financial institutions, "this will lead to the reorganization. There is also a cautious view that "it must not be done".
Yasuyoshi Oya, chairman of the Regional Banks Association of Japan, said at a press conference last month (November) that "reorganization is just a means, not an end", but "a management strategy that requires reorganization and increases value in the region." It is a policy that will support the government and the reorganization side, "he said, showing a certain understanding of the response of the government and the Bank of Japan.
Regarding the BOJ's special system, Chairman Oya said, "It is a recognition that we intend to mitigate the negative impact of the negative interest rate policy as much as possible."
On the other hand, the president of one regional bank said, "We welcome you, but it is not the case that we will move toward integration because of support measures," and executives of another regional bank also said, "It is already under the surface. If you were considering this integration, it may be an opportunity to proceed with it, but it will not be a direct factor in considering a new integration. "
Expert "There is also an aspect of slightly modifying mitigation measures"
Regarding the BOJ's special system, Nomura Research Institute's executive economist Takahide Kiuchi, who served as a deliberation committee member of the BOJ until three years ago, said, "The BOJ's finance so far to achieve the 2% price target, such as the negative interest rate policy. The easing measures have been a headwind for regional financial institutions, such as lower interest rates and worsening profits. As a result, there are concerns that the management of financial institutions will become unstable in the future. There is also an aspect of this system that slightly amends the mitigation measures so far. "
In addition, regarding the government and the Bank of Japan launching a system to support the integration of regional financial institutions one after another, he said, "In order to survive where the scale is so small that it has already lost its competitiveness and profitability. I think there is a desire to think about integration. However, integration and merger are very heavy options for financial institutions, and this system may not lead to a sudden increase. " I'm talking.