The Financial Services Agency is extending provisions that help regional financial institutions get public funds in response to risks posed by Britain’s vote to leave the European Union, sources say.
The regulator, which oversees banks, securities brokerages and other financial institutions, is extending by five years a program that allows regional banks and credit unions to borrow from the public purse more easily, people knowledgeable about the matter said Tuesday.
The extension comes as authorities remain wary of risks posed by Britain’s decision to leave the European Union.
The day after Britain’s June 23 vote, Japanese stocks suffered their biggest daily plunge in more than five years, while financial markets were roiled and fears were raised that the shock would damage the already fragile global economy.
The Nikkei’s drop was its steepest since March 2011, when the risk of a nuclear catastrophe following a devastating earthquake and tsunami sent financial markets reeling.
In the wake of the nuclear crisis, the FSA set up a safety net under an Act on Special Measures for Strengthening Financial Functions, which scrapped requirements such as setting profitability goals for regional financial institutions when applying for much-needed public funds.
The deadline for applying for funds under the scheme was originally set at March 2017.
The FSA is also extending by five years, to 2022, a deadline for the Banks’ Shareholdings Purchase Corporation to purchase equities, the sources said. The BSPC buys shares in Japanese banks to help reduce cross-shareholding among them.
Government financial assistance to Life Insurance Policyholders Protection Corporation of Japan, which offers support to bankrupt life insurers, is also to be extended by five years from March 2017, the sources said.
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