Japan’s banking sector faces pressure to consolidate

Significance

In response, parliament passed a law in May 2020 (effective November) to promote integration and mergers among regional banks by granting exceptions from the anti-monopoly law.

Impacts

• Powerful local interests, ministerial allegiances and barriers to cutting jobs will perpetuate the overall problem of too many small banks.
• Restructured banks will need to compete with financial establishments under government ministries, the Post Office and local prefectures.
• Regulators seem to accept that banks must enter non-banking pursuits to survive; the future looks bleak for many that do not.