Negative-Rate Lending Closer to Reality in Japan as Tibor Slumps
- Three-month Tibor drops to record low after BOJ policy easing
- Negative-rate lending possible if Tibor below zero: SMBC Nikko
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Japan’s banks may soon have an incentive to pay borrowers to accept loans, if they can raise funds at even cheaper rates.
Negative interest-rate lending has become more of a possibility since the Bank of Japan started levying charges on idle cash. Lenders can now borrow for three months in the Tokyo interbank market at a record-low 6 basis-point annualized rate, versus 17 basis points since the BOJ move in January. They may eventually be able to be paid to borrow and then profit by paying less to lend, according to Credit Suisse Group AG, JPMorgan Chase & Co. and SMBC Nikko Securities Inc.