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The Financial Supervisory Agency will map out guidelines for the recapitalization of regional banks through public funds by the time they release their earnings reports in late May, FSA head Hakuo Yanagisawa said Friday.

The FSA is working on the assumption that banks with capital-asset ratios below 4 percent will request the capital injections. Banks operating solely in Japan are required to keep their capital-adequacy ratio above this level.

The agency is now working to set criteria that will help it determine whether a financial institution making such a request can continue to operate and whether the public funds pumped into the bank can be recovered.

Although similar capital injections were made into 15 banks in March, these were basically the nation’s largest banks. Thanks to the move, market jitters over the financial system’s creditworthiness were for the greater part allayed.

Financial regulators are now shifting their focus to the nation’s smaller banks and are nudging them toward restructuring and industry realignment.

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