Japan Press Weekly

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2017 November 15 - 21 [ECONOMY]

Stagnant in main business, 3 megabanks will lay off 30,000 bank employees

With a continued slump in earnings from domestic loans, three major financial groups in Japan have recently announced that they will make use of artificial intelligence tools to downsize the workforce and will lay off more than 30,000 bank employees in total.

According to a business streamlining plan they separately announced, cuts in the payroll will total about 19,000 at Mizuho Financial Group by fiscal 2026, about 9,500 at Mitsubishi UFJ FG by FY2023, and about 4,000 at Sumitomo Mitsui FG by FY2019.

The three groups also decided to reduce the number of their outlets in Japan and launch a service using artificial intelligence to finance small- and medium-sized enterprises as a part of efforts to cut personnel costs. However, many loan servicing officers are pointing out, "It is essential to meet SME owners face-to-face to properly assess their loan applications."

One of the primary activities in banking is to earn profits from moneylending. The current impasse in this area has arisen from prolonged ultralow interest rates under Bank of Japan's monetary easing of "a different dimension".

Along with the BOJ's rock-bottom interest rate policy, shrinking domestic demand has also caused stagnant bank businesses in Japan. Prime Minister Abe's economic policy brought about benefits to large corporations and the wealthy but did not help increase wages for a large majority of workers, seriously depressing consumer spending.

It will be necessary to utilize a portion of the internal reserves of big businesses to allow for a pay raise in order to boost personal consumption. At the same time, the Abe government should shift the present monetary policy causing a squeeze on the core business of financial institutions.