Regional banks in Japan - Kiyo Bank

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I was able to visit the Head Office in Wakayama and also the Sakai City branch office of the Kiyo Bank and I am very grateful to Rotary in Japan and Tetsuhiko Koide san, Senior Managing Director, Kiyo Bank, (CEO) for making me so welcome.

All my host families to date have their own businesses banking with Kiyo Bank.

There are 3 categories of financial institutions in Japan –

* The central bank – Bank of Japan
* Private financial institutions, either (a) licensed to accept deposits, or (b) others (e.g. regional banks, city banks, foreign banks in Japan)
* Public financial institutions (e.g. Japan Post, Development Bank of Japan, government affiliated financial bodies).

In category 2 above, city banks offer banking services to large corporate customers and regional banks focus on retail banking and the SME market. Some statistics supplied by the Regional Banks Association of Japan as at 31 March 2007;

64 Regional banks
7,435 branches (including overseas offices)
125,869 employees

Since the ‘Bubble’, which hit the Japanese financial community very hard in the mid 1990’s the banks have maintained a cautious approach and the Japanese government has been actively deregulating the industry and regional banks can now offer a much broader range of services.

Regional banks are an integral part of the regional economy and enjoy the patronage of their communities. Their priority is to ensure that they maintain credit opportunities for their own communities and there is strong bond with local government which extends to secondments and bank lending to support infrastructure products. This has been mentioned at our visits to hospitals and universities. Competition is however provided by the branch network of the 3 major city banking groups, Mitsubishi UFJ, Sumitomo Mitsui Bank and Mizuho.

The Kiyo Bank recently merged with the Wakayama Bank to strengthen their position in the community and as the relative sizes were c.7:1 there were no particular issues with this merger. They attribute the success of the merger to the swift integration of IT systems above anything else.

Corporate Governance and Risk Management is similar to our own and this is no real surprise in a global market where there should be a common standard. Compliance breaches are reported to the Japanese Financial Services Agency.