Japan urges banks to reduce cross-shareholdings

Japan's financial regulator urged the country's biggest banks to reduce their cross-shareholdings, warning that their heavy exposure to the equity markets poses risks to their capital. The cross-shareholdings of Japan's three largest banks are equivalent to nearly 50 percent of their core capital, the Financial Services Agency said, far exceeding their peers in the United States and Europe where the figure is less than 10 percent.
"The impact on their capital at times when the stock market falls cannot be ignored," the agency said in an annual report on its financial supervision, published on Friday. "They need to bolster their financial strength, including reducing the risk from stock price volatility," it said.