October 20, 2017 / 6:46 AM / a year ago

Japan regulator to question regional banks on business model-sources

TOKYO, Oct 20 (Reuters) - Japan’s financial regulator is planning to question regional banks that are deemed to have poor buiness models, sources with direct knowledge of the matter said on Friday.

The Financial Services Agency is concerned some regional banks are neglecting their core lending operations to local businesses. It is worried they instead are relying heavily on securities investment and loans for apartments as rental properties, the sources said.

The agency has been urging regional banks to come up with more sustainable ways to make money as they face diminishing returns on their traditional lending business amid an ageing population and ultra-low interest rates.

The sources declined to be named because they are not authorised to speak publicly on the matter.

The FSA did not immediately respond to a request for comment. (Reporting by Taro Fuse and Takahiko Wada; Editing by Chris Gallagher)

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