Beginning Friday, in a sure sign of the renewed strength at Japanese banks, the government will reimpose the legal cap on deposit-insurance coverage. Nine years ago, in 1996, that ceiling -- 10 million yen in principal plus interest -- was removed amid widespread concern about banks' ballooning bad debt.
More than 20 percent of Japanese households are believed to have bank deposits totaling more than 10 million yen. From now on, though, individual bank deposits of that size will no longer be fully protected in the event of a bank failure -- except when "regional credit order is seriously threatened."
Smaller depositors are not entirely risk-free. For example, residents in a condominium, even if their deposits fall short of the ceiling amount, could be affected nonetheless if a bank taking care of their union's large reserve goes bankrupt. Similarly, a company's employees may suffer if it has a large retirement account in a failed bank.