Japan Press Weekly
[Advanced search]
Past issues
Special issues
Fact Box
Feature Articles
Mail to editor
Mail magazine
HOME  > Past issues  > 2020 November 25 - December 1  > Realignment of regional banks will harm local economies
> List of Past issues
Bookmark and Share
2020 November 25 - December 1 [ECONOMY]

Realignment of regional banks will harm local economies

November 30, 2020
Akahata editorial (gist)

The Suga government and the Bank of Japan (BOJ) are promoting a realignment of regional banks, claiming that there are too many regional banks. A special provision, which excludes increases in the share of the market as a result of regional bank integrations and mergers from the Antimonopoly Law, came into force on November 27.

According to Daiwa Institute of Research, about 1,000 branches of regional banks and city banks will disappear in the coming few years. Local business owners are voicing their concern over an expected reduction in bank loan options and a possible reluctance of banks to extend new loans.

At present, both small- and medium-sized enterprises (SMEs) and regional banks which financially support SMEs are being hard hit by the still-alarming COVID-19 pandemic. Out of 102 regional banks, 60 banks posted a drop in their profits or fell into the red in the half-year accounts in September.

The management base of regional banks has been debilitated in accordance with the declining number of SMEs. After the Liberal Democratic Party government in 1999 abandoned the principle of rectifying disparities within SMEs from the SME Basic Act, the number of SMEs reduced sharply by 1,260,000 to 3,580,000 in 2016, which corresponds to the 25% decrease of customers for regional banks.

While local economies have been in a crisis situation due to the pandemic, the railroading through of realignment of regional banks will create disadvantages to not only local SMEs but local residents and regional banks' customers. Whether to merge or not should be left to each bank's own judgement. The need now is for the government to take measures to boost support for SMEs and local economies.

Past related article:
> Gov’t attempt to continue ‘different dimension’ easy money policy will trap Japanese economy in hell [February 17, 2018]
> List of Past issues
  Copyright (c) Japan Press Service Co., Ltd. All right reserved