The Financial Services Agency on Saturday replaced the Financial Supervisory Agency as the nation’s top bank regulator, assuming the duty of salvaging Japan’s bad loan-swamped banking industry.
|A worker puts in place the kanji for new bank watchdog the Financial Services Agency on a sign outside its headquarters building in Tokyo’s Kasumigaseki district on Saturday.|
Its predecessor was launched two years ago amid public outrage over the Finance Ministry’s bank-related oversights and blunders, which are deemed to be a chief cause of the accumulation of massive bad loans at Japan’s banks.
As part of the government’s organizational realignment, the new regulator has absorbed the Finance Ministry’s Financial System Planning Bureau, which is in charge of devising policies relating to banks and other financial institutions.
It will kick off actual operations on Monday.
On Saturday morning, workers began replacing the sign for the FSA with that of the new Financial Services Agency at its headquarters in the No. 4 government building in Tokyo’s Kasumigaseki district.
The Economic Planning Agency and the Management and Coordination Agency also currently occupy several floors of the same building.
Numerous boxes containing files of the Finance Ministry’s Financial System Planning Bureau were moved into the building Saturday morning from the ministry’s headquarters building, which stands adjacent.
Since its foundation in 1998, the FSA had been supervising and conducting inspections of financial institutions based on transparent rules, a break from the old method of financial administration based on the bureaucratic discretion of the Finance Ministry.
The new agency will take over these duties.
With Japan’s financial policy having paved the way for the creation of gigantic banking groups such as the Mizuho group, which will combine Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan, the new agency needs to create an effective means of inspecting and supervising “megabanks.”
In addition to those duties, it will have to prove its ability to devise policies for financial policy planning.
The new agency will also begin inspecting credit unions, some of which are swamped with bad loans.
Financial industry officials question whether the agency will be able to conduct adequate investigations as it has little more than 300 inspectors.
In January, the agency will become a full-fledged financial industry watchdog by absorbing the Financial Reconstruction Commission, which has primarily been responsible for dealing with failed banks put under state control.