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[TOKYO] Japan is considering relaxing rules on what businesses bank holding companies can own, a person with direct knowledge of the matter said, allowing lenders to invest more freely in IT ventures as they face growing competition from non-bank online payment services.
The rule changes would also allow bank holding companies to allocate assets and functions more freely among subsidiaries, said the person.
Both Japanese banks and regulators have become concerned that current regulations may find them not sufficiently flexible to navigate rapid changes in business, whether that be digital advances in financial payments or coping with the pressure to merge for regional lenders. "Japan's banking business model has been based on traditional industrial finance and that's not a good fit for today's customer needs," said Ryoji Yoshizawa, analyst at Standard & Poor's in Tokyo. "It's positive they will be able to get more involved in online retail businesses, for instance," he added.
Non-traditional financial services include Alibaba's Alipay online payment platform and Apple Inc's Apple Pay.
A relaxation of rules would also likely make it easier for regional banks to hive off and integrate certain operations like asset management as they come under pressure to merge amid low growth prospects.
Japan's Financial Services Agency will officially start discussion on the rule changes in March, said the source, who declined to be identified as he was not authorised to speak to the media.
The Nikkei business daily said the government could submit a bill early next year to introduce the changes.
Japan's three biggest banking groups, including Mitsubishi UFJ Financial Group Inc, have commercial banks, securities brokerage house and other financial services subsidiaries.