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nid 94420
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ggallwey@vixio.com
Japan
Financial Services Agency
financial services
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1507 charsJapan's Financial Services Agency Publishes Report on Deposit-Taking Financial Institutions Monitoring
On July 31, 2026, the Financial Services Agency (FSA) published a "Report on the Monitoring and Analysis of Deposit-Taking Financial Institutions." The report summarises the FSA's prudential supervisory activities of deposit-taking financial institutions during Business Year 2025 (July 2025 to June 2026).
The report addresses seven key areas of supervisory focus. These include trends in deposits following Japan's policy interest rate increase; trends in real estate-related loans amid rising real estate valuations; securities investment activities at deposit-taking financial institutions; loans to and investment in overseas funds, which major banks have increasingly emphasised; the FSA's off-site and on-site supervision of governance and internal controls; implementation of Basel III in Japan; and the FSA's initiatives on data analysis and new technology adoption. The report reflects the FSA's comprehensive approach to monitoring systemic risks and institutional compliance within Japan's deposit-taking sector, covering both macroeconomic trends and microeconomic supervisory oversight.
The FSA has made an English translation of the executive summary available to international stakeholders. The full report remains available in Japanese. For further information, stakeholders can contact the Macro-financial Stability and Data Strategy Office, Risk Analysis Division, Strategy Development and Management Bureau, at the FSA's main office telephone line (+81-(0)3-3506-6000, extension 3676).
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1730 charsJapan's Financial Services Agency Publishes Report on Deposit-Taking Financial Institutions Monitoring
On July 31, 2026, Japan’s Financial Services Agency (FSA) published its Report on the Monitoring and Analysis of Deposit-Taking Financial Institutions. The report presents selected aspects of the FSA’s prudential supervisory activities during Business Year 2025, covering July 2025 to June 2026. The FSA notes that it is not a comprehensive account of its supervision or a checklist for inspections.
The report examines deposit trends following Japan’s transition to positive interest rates. As changes in deposit and lending rates affect banks’ earnings and balance sheets, institutions are expected to strengthen asset-liability management across deposits, loans and securities. It also addresses real estate lending, including rising housing-loan amounts and the growth of ultra-long mortgages and “pair loans”. Banks should explain repayment risks to borrowers, conduct appropriate loan screening, and maintain robust credit-risk controls.
The report also highlights growing unrealised losses on securities investments, particularly at regional institutions, and expects boards to establish and monitor appropriate loss limits. For loans to and investments in overseas funds, the FSA notes that institutions should improve group-wide oversight, data on fund sponsors and underlying assets, and stress testing of connections with non-bank financial institutions.
The report further covers internal audit and governance weaknesses and the implementation of Basel III across all deposit-taking institutions. Finally, it describes the FSA’s use of data analysis and artificial intelligence to strengthen risk-based supervision.
The report is informative and does not introduce new binding requirements, deadlines or penalties.