May 20, 2014 / 2:58 AM / 4 years ago

Japan LDP to propose GPIF legal overhaul, 'super regional banks' - source

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe’s ruling party will urge the government to consider strengthening the governance of the world’s biggest pension fund and to promote the creation of “super regional banks”, a party source involved in the matter said.

The proposals are part of a submission the Liberal Democratic Party will make as early as this week to the government for consideration in Abe’s “growth strategy” of economic structural reforms, due in June, the source told Reuters.

The LDP will propose that the government consider legal changes to strengthen the governance of the $1.26 trillion (749.19 billion pounds) Government Pension Investment Fund (GPIF), the source said.

Details of the proposal were not immediately available, but sources have told Reuters that Abe is moving to shake up oversight of the GPIF by giving it an expanded board with its first full-time members to steer a shift out of Japanese government bonds and into higher-yielding assets.

Laying the institutional and legal framework for super regional banks could promote the consolidation of Japan’s 100 regional lenders.

The former head of Japan’s banking regulator told a Reuters Summit on Monday that consolidation is necessary for regional banks to survive a climate of dwindling borrowers, as it will allow them to extend riskier and therefore more profitable forms of financing.

The LDP will also propose the expansion of Japan’s professional baseball leagues to 16 teams from 12 to energise regional economies, the source said. It was not immediately clear what the government’s role would be.

Reporting by Takaya Yamaguchi; Writing by William Mallard; Editing by Edmund Klamann

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