, Columnist
Japan's Banks Tap a Gold Mine
Stock sales are padding profits. Improved governance is a by-product.
This article is for subscribers only.
Japan's banks can't make money in a zero-rate world, so they're selling down their stock portfolios to meet profit targets. That's a gold mine for the lenders, and a bonus for governance.
For years, Prime Minister Shinzo Abe urged lenders to reduce their stakes in client companies. A bank that owns shares in a loan customer may be inclined to roll over debt indiscriminately. And the bank's own stock may be vulnerable to daily market moves if the institution holds a disproportionate amount of equity in its portfolio.