Japan's Financial Services Agency plans to ease capital adequacy requirements for banks making joint investments with government-backed lenders

The Financial Services Agency announced a plan to allow banks to maintain lower capital reserves when making joint investments with government-backed financial institutions, which are considered lower-risk than ordinary investments.

The reduced requirement applies to investments in startups, turnaround support companies, and businesses revitalizing regional economies, and requires co-investment with the Development Bank of Japan or other government-affiliated lenders. Current rules mandate capital-to-asset ratios of at least 8% for internationally active banks and at least 4% for domestic banks.

The measure aims to encourage public-private funding and support small regional companies. The agency will formally decide to revise related notifications after collecting public comments.