A newly enacted law allowing the government to inject public funds into regional financial institutions will probably encourage such bodies to merge, according to the commissioner of the Financial Services Agency.
The law is "a very effective tool" for promoting mergers and management reforms among regional financial institutions with weak capital standing, FSA Commissioner Hirofumi Gomi said in a recent interview with Kyodo News.
His comments indicate many regional banks have shunned mergers as positive effects are unlikely to be generated due to a lack of capital.