Japan’s regulator sees more deals emerging as fintech disrupts banking industry

Photographer: Tomohiro Ohsumi/Bloomberg

Japan will likely see more financial tie-ups that extend beyond traditional boundaries similar to those signed between internet banking giant SBI Holdings Inc and regional banks, the country’s senior financial regulator said.

Advances in financial technology could trigger structural changes in Japan’s banking industry by breaking barriers between lending and other services, said Teruhisa Kurita, who oversees bank supervision at the Financial Services Agency (FSA).

“We’ll likely see more such cases as industry boundaries start to disappear,” Kurita said of SBI’s string of tie-ups with regional banks. “There could be combinations we never thought about,” he told Reuters on Friday.

Years of ultra-low interest rates and a dwindling local population have hurt profits of regional banks, prodding some to consolidate or sign business tie-ups with each other to survive.

Some have joined forces with SBI, a newcomer in the industry strong on online banking. SBI already owns stakes in a handful of regional lenders in a drive to create a nationwide group.

Kurita said while consolidation is among options, it was not the only way for regional banks to survive.

“I don’t think it’s a question about the number of banks,” he said, when asked whether Japan’s regional banking industry was over-crowded. “What’s important is for each regional bank to be clear about what business model it is pursuing.”

With more than 70% of regional banks suffering red ink or shrinking profits, the government has laid the groundwork for them to consolidate or seek new businesses.

Top government spokesman Yoshihide Suga, who is emerging as a strong candidate as the next prime minister, told Reuters more consolidation among regional banks was necessary.

“Conditions surrounding Japan’s banking industry are very severe,” Kurita said. “We’re experiencing huge changes. Unless you adapt to these changes, it’s hard to survive.”

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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