Business

Japan's Financial Services Agency to check financial institutions' readiness for any emerging market swings

Reuters

The Financial Services Agency plans to check if Japan’s banks and other financial institutions are prepared to deal with any impact from sharp swings in emerging markets, sources with direct knowledge of the matter said Wednesday.

This readiness is expected to be a key part of the annual oversight policy for the FSA during its business year that started in July, said the sources, who did not want to be named as they were not authorized to discuss the matter. It is expected to be announced within days.

The FSA’s move reflects growing concerns about a potential fallout from market turmoil in emerging economies such as Turkey, whose lira currency has plunged 40 percent this year on concerns about the credibility of the central bank.

The agency will check the risk management and compliance of major banks’ overseas operations, such as Mitsubishi UFJ Financial Group, the sources said.

The FSA will also monitor the sales practices of banks and deter potential abuse by lenders selling financial products, they said.

An FSA spokesman declined to comment.