Japan’s biggest brokers are having second thoughts about selling so-called structured loans to regional lenders after the nation’s financial regulator declared a sweeping clampdown on the $67 billion market.
Nomura Holdings is weighing its approach toward Japanese government bonds repackaged into loans, a representative said in response to a survey of 15 investment banks. The brokerage arms of Mitsubishi UFJ Financial Group and Mizuho Financial Group are also looking into their sales of that product, which is under intense scrutiny from the Financial Services Agency.
Caution has taken hold in the securities industry since a senior FSA official criticized local banks’ increased purchases of repackaged JGBs in an interview last month. While the product complies with Japanese laws, fears of further regulatory scrutiny could cause buyers and sellers to pause, putting the market at the risk of disappearing, according to Bloomberg Intelligence.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.