Japan's financial regulator has sounded out top domestic banks about China risks and whether they have plans in place if Sino-Western tensions escalate, according to multiple sources with direct knowledge of the matter.

The Financial Services Agency's request, which has not been previously reported, is to ensure Japan's mega-banks are thinking about the risks and are prepared to respond if the geopolitical situation worsens, including over the issue of Taiwan's political status, said three of the sources.

Japanese mega-banks Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group have a combined $6.5 trillion in assets, according to Refinitiv.