[Questions and answers:]
- On October 1, the Juhachi-Shinwa Bank will be launched in Nagasaki Prefecture. The goal is to revitalize the local economy in the face of a declining population by merging regional banks in the prefecture. However, there is also concern about the impact on service such as rising interest rates and other factors because the bank will have a market share as high as 70%. Please let us know your expectations of the new bank and how you expect it will deal with this issue.
- I do believe the merger of banks in Nagasaki took the form of something like a business grouping under the Fukuoka Bank, and there are other places that have done something similar. Because there are also places that have adopted other approaches, regional banks have taken on different modalities in different regions – including second-tier regional banks, credit unions (shinkin banks), and credit associations – but, because circumstances vary by region, it is not as simple as saying that mergers would uniformly be a good idea. For instance, there are no large banks in Kyoto. Such local circumstances are common to all locales. Consequently you cannot say across the board that something is good or bad. As for interest rates, that portion lent by the Bank of Japan from its reserves to the banks that actively provided funds in this instance in various forms will bear an interest rate of just 0.1%. Naturally, the money is being lent out in a lump-sum fashion. On average, about 2% of that portion of the loans from shinkin banks and such that had previously come from the monetary base has gone on to increase the money supply. This has climbed to 5% or 6% since the Bank of Japan’s announcement, and the amount by which the money supply has sharply risen is undoubtedly encouraging regional banks to refinance in this direction. Because approaches like having them take the money borrowed heretofore and refinancing this way work out better for them, regional banks have been switching over en masse, and this is an approach that shinkin banks are probably taking even more often. In light of this, I think all the shinkin banks are doing what regional banks should more pro-actively be doing. Taking that into consideration, it appears to me that regional banks could have been a bit more responsive in their management and sales efforts. Ultimately, though, this is an issue for management, and the Financial Services Agency should not be interfering by telling banks to consolidate or whatever, as this must be left to the business judgment of individual institutions.