Kuroda struggles to wean banks off bonds

Tokyo

WITH the Japanese economy weakening markedly, banks are flocking to longer-dated government debt on expectations that the Bank of Japan would expand its stimulus programme. That's creating fresh challenges for BOJ governor Haruhiko Kuroda, who's trying to get banks to buy fewer bonds and to lend more.

Net purchases by city banks of the nation's sovereign debt maturing in 10 years or longer reached 1.16 trillion yen (S$13.98 billion) in August, the highest in 11 months, data from Japan Securities Dealers Association showed. The proportion of banks' loans to deposits was at 0.673 in August, near a record low touched in May, according to Bloomberg-compiled data based on central bank figures.