The Diet on Friday passed two bills that remove a five-decade ban on the use of financial holding companies.
A plenary session of the House of Councilors approved the bills, which will be enacted next March as part of the government's "Big Bang" financial reform measures. A financial holding company is the command post of a conglomerate typically consisting of a giant bank, a trust bank, a life insurance firm, a nonlife insurer and a securities firm. Such powerful corporations were banned by the U.S. occupation forces after World War II.
The Fuyo Group, led by Fuji Bank, is expected to be the first firm to set up a holding company. The company would control both the bank and its financially troubled unit Yasuda Trust & Banking Co., which is currently the focus of a major Fuji group overhaul.
Although the ban is being lifted, regulations will be imposed on any financial holding company with a bank under its control, to prevent excessive power from forming. Under one measure, such firms will not be permitted to acquire an equity share of more than 50 percent in any nonfinancial companies.