Japan to Crack Down on Booming Market for JGB-Backed Loans
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Japan’s financial regulator plans a sweeping crackdown on $67 billion of high-yield loans backed by government bonds and other assets that have gained popularity among regional banks even after officials warned about their risks.
The Financial Services Agency will scrutinize banks that have increased purchases of Japanese government bonds that are repackaged into loans over the past year, said Toshinori Yashiki, director-general of the agency’s strategy development and management bureau. Brokerages that are actively pitching these products to lenders will also be in the regulator’s crosshairs, he said in an interview on Thursday.