Japanese banks can not blame the BOJ for their problems, says new head of lobby

TOKYO (Reuters) – Japanese lenders should not blame the Bank of Japan's extremely loose monetary policy for not being able to generate trading revenue or generate poor returns from lax risk management said the new head of the country's banking lobby.

Makoto Takashima said that banks should instead take responsibility for their own risk appetite and their investment strategy, plunging into a long-running debate about the impact of extremely low interest rates. low on commercial lenders.

Japanese banks complained about the central bank's extremely flexible policy, which they said would have reduced yields on traditional loans and weighed on their performance. Banks, especially small regional lenders, have also been affected by declining populations.

"I do not think that banks are quite right to blame monetary policy for changing their appetite for risk or the poor performance of their investments because of a looser of risk control," Takashima said in a statement. interview with Reuters.

"Each bank should be responsible for its risk appetite to meet the needs of its customers and increase its revenue," he said.

Takashima is also the head of the largest unit of Sumitomo Mitsui Financial Group Inc., the third largest lender in Japan in terms of badets. He takes the presidency of the Japanese Bankers Association as of Monday.

His comments seem to be a break from those of his predecessor, Koji Fujiwara, who had urged the BOJ to revisit its 2% inflation target and its ultra-loose monetary policy – which had been one the strongest comments since banking lobby.

Meanwhile, Isao Kubota, chairman of Nishi-Nippon City Bank in southern Japan, told Reuters recently that the central bank's stimulus package was so damaging to the benefits that even mergers between regional banks could not solution.

Although Takashima agreed with most of his predecessor's comments, he stressed that the banks themselves were responsible for executing their activities as part of the central bank's monetary policy.

Nevertheless, the sector is facing obstacles: ultra-flexible monetary policy should continue, while banks are under pressure to restructure their retail activities as the population continues to shrink and more and more people customers change their financial transactions.

Mizuho Financial Group, Japan's second-largest bank in terms of badets, cut its earnings outlook for the year by 86 percent, citing costs for closing retail branches and restructuring its foreign bond portfolio.