The Japanese authorities are considering a plan to follow the American example and abolish the Glass-Steagall-like divide that has kept commercial banking, investment banking and insurance separate from each other. Or so suggest reports circulating in Tokyo.
“It seems the Financial Services Agency (FSA) is considering introducing a new financial programme, although we could not confirm its contents,” says a spokesman for Sumitomo Mitsui Banking Corporation in Tokyo. “It is likely that a financial institution will be authorized to conduct banking, securities broking and insurance businesses simultaneously within a couple of years.”
The change would involve amendments to the existing Japanese Banking Law, Securities and Exchange Law, Insurance Business Law and other statutes. It is understood that the authorities are aiming to combine all relevant laws into a single “Financial Conglomerate Law.”
FSA officials have declined to comment in detail. “We are working so that the FSA will be able to publicize a certain new financial programme in December,” says an FSA spokesman. “You will see something on the FSA’s website soon.”
The SMBC spokesman believes the introduction of universal banking will be good for custody clients of the Japanese banks. “If a universal banking system is introduced as a result of the new programme, custodians in Japan will be able to offer more convenient services to customers,” he says. “The division or fire-wall between banking and securities brokerage businesses has caused some inefficiency and inconvenience in the operation of our services.”