Japan's Financial Services Agency said it will strengthen surveillance of banks that are showing sign of stress due to years of ultra-low rates and a shrinking population, Reuters reported.
The financial regulator will implement measures such as on-site inspection and administrative penalty on banks that record continuous deficit or log capital adequacy ratio of below 4%, the report added, citing the regulator's annual report.
The regulator will also explore the possibility of lowering the deposit insurance rate for financially robust lenders in an effort to encourage mergers and acquisitions among regional banks. All Japanese financial institutions are currently required to reserve a 0.033% deposit insurance fee as bankruptcy provision, Reuters noted.
