It is important to maintain financial and transportation infrastructure that supports regional economies while preventing the harmful effects of a possible monopoly.
The government's Council on Investments for the Future is considering measures to support business integration and tie-ups among regional banks and fixed-route bus companies, with a view to bolstering their management foundations.
"[Measures will be implemented to] create a system for making integration and other moves possible, or lay down transparent rules," Prime Minister Shinzo Abe said at a council meeting.
The council is said to intend to consider plans to establish a special-case law and guidelines regarding such matters as the Fair Trade Commission's examination of business integration plans. Regional banks and other entities will likely be allowed to merge or form tie-ups on the condition that they continue to provide regional services. The council will reach conclusions as early as next summer.
There has been a conspicuous decline in regional economies. The impoverished condition of regional communities could be exacerbated if the FTC calls a halt to the realignment of regional banks and others by citing a regional monopoly as a reason for its move, a situation that would frustrate efforts by these entities to rebuild their businesses. The council's course of action is reasonable, as it seeks to ease requirements regarding the examination of integration plans and to encourage these entities to integrate their business operations.
One of the factors behind the financial difficulties facing the regional banks is the excessive competition that has resulted from an overly large number of such banks, or what is called overbanking.
After undergoing a financial crisis in the latter part of the 1990s, major banks were consolidated into three megabanks and others. In contrast, there are more than 100 regional banks nationwide.
Preserve transportation
In the settlement of accounts ending in March this year, 52 regional banks, about half of the total, suffered losses in their main line of business for two or more consecutive terms.
Improving business efficiency through management integration is a workable option for them in the efforts to regain their strength.
The FTC had initially showed disapproval of the integration of regional banks in the Kyushu region, making such assertions as that the post-integration share of loans extended by the banks involved would exceed 70 percent in Nagasaki Prefecture. The integration plan was finally approved, following a reduction in the share through such means as the transfer of loans to other banks. But gaining the approval took more than two years since the integration plan had been announced.
The council has expressed its view that there are concerns that a lengthy examination of integration plans will leave regional banks that are considering a merger and other options negative about those moves.
The council's anxieties are pertinent. The FTC should respond to the matter in a realistic manner suited to the severe circumstances facing regional banks.
Meanwhile, 157 fixed-route bus companies, more than 60 percent of the total, are operating at a loss. If the situation goes unchecked, they will be in serious financial trouble, and their regional services could be lost.
To prevent this, it is conceivable for multiple bus companies to hold discussions on their operational routes and the number of their services, thereby adjusting their operations so each can stay in business.
Under the circumstances, the FTC may judge such arrangements to be an unfair cartel. The FTC should be advised to be flexible in approving of such arrangements so a means of transportation in local communities can be preserved.
Needless to say, it is not permissible to raise lending rates by improperly using a strong position of regional monopoly, and unfairly increase bus fares through a cartel. Appropriate post-integration checks are required.
(From The Yomiuri Shimbun, Nov. 26, 2018)
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