IMF warns of banking systemic risk in Japan
Jiji -- Oct 12
The International Monetary Fund, in a report released on Wednesday, warned of the risk of problems at only one major bank in Japan causing "stress" in the entire banking system in the country.

In the global financial stability report, the IMF voiced its concern over weak profitability particularly at the three Japanese megabanks as well as major European banks.

Profitability of "global systemically important banks," or GSIBs, in Japan and Europe has been held down by "structural forces such as high operating costs, low operating efficiency, and highly competitive home markets, exacerbated in several cases by weak information technology systems," the report said.

"An environment of low domestic interest rates also affects the Japanese GSIBs," it went on to say. The report then pointed out that the Japanese megabanks, including Mitsubishi UFJ Financial Group Inc. <8306>, seek "continued international expansion to offset compressed domestic profitability" and that "such expansion increases currency and maturity mismatch risks."

News source: Jiji
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