Japan’s FSA Scrutinizes Real Estate Lending By Regional Banks

Last month, Japan Times reported that due to strong demand for redevelopment projects in the Tokyo and growing asset management needs of individuals, real estate loans extended by banks are rising in Japan.

The Financial Services Agency (FSA) was reported to be increasing surveillance of regional and credit banks for any signs of negative impact on their operations owing to the surging real estate loans, industry sources told the news source.

ForexLive now reports that according to Reuters, the regulator is examining regional banks' high proportion of real estate lending over concerns about the impact on banks in the event of possible downturn in property market.

“The real estate market tends to deteriorate rapidly once it starts slowing,” a senior FSA official told Japan Times.

The FSA has met officials of banks whose property lending has increased recently, ForexLive said.

Japan's property market was badly hit by the 2008 financial crisis. Partly helped by Abenomics, the sector has recovered, with land prices in the country’s largest cities rising for the first time in six years in 2013.