The financial standing of companies must be examined before and after their subsidiary banks receive banking licenses, according to a set of draft guidelines released Thursday.
The guidelines for authorizing newcomers to the banking business also require that a subsidiary bank's management be independent of its parent firm. Fire walls between the two must also be in place to prevent the parent's business risks from affecting the bank.
The Financial Reconstruction Commission and the Financial Supervisory Agency jointly submitted the guidelines to the Liberal Democratic Party's committee on financial affairs. The committee effectively endorsed the guidelines without opposition, said Hideyuki Aizawa, head of the LDP's Investigation Committee for Finance and Banking Systems.