BOJ To Assess Banks' Corp Revival Efforts

TOKYO (Nikkei)--The Bank of Japan announced Friday that it plans to focus on lenders' efforts to help troubled borrowers during its fiscal 2013 audits.

In its fiscal 2012 inspections of financial institutions, the central bank found their assessments of borrowers' business improvement plans and follow-up efforts insufficient. In the coming fiscal year, the BOJ will thus urge banks to "thoroughly grasp the state of business at mid- to small-size borrowers and propose solutions commensurate with their challenges."

With a law designed to facilitate refinancing by over-burdened businesses expiring in March, the BOJ wants to ensure that small businesses continue to receive adequate assistance.

Noting that borrowers are increasingly expanding operations overseas, the central bank plans to make sure that banks have detailed risk management plans in place and that they have enough foreign currency reserves.

Given that banks, particularly regional lenders, are increasing their holdings of long-term government bonds, the BOJ will check whether they are prepared to weather the impact of a sudden rise in interest rates.

In fiscal 2012, the central bank audited 98 financial institutions, including banks, credit unions and brokerages.

(The Nikkei, March 16 morning edition)

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