The coronavirus pandemic is deepening the pain for Japan's regional lenders, heightening concerns that a potential wave of business closures will test policymakers' ability to avert a damaging banking-sector crisis.
Many central government and bank officials see the risk of a crisis emerging in the next few months, when more struggling firms could go under and hit regional banks already weakened by a shrinking domestic economy and years of ultra-low interest rates.
Yet officials still have few plans besides prodding the ailing lenders to recapitalize or consolidate — and little clue on how to do this in an orderly fashion, say five government and banking sources with direct knowledge of the matter.