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BOJ to give rate boost to regional banks that merge or lift profit

Move creates incentive for consolidation in overcrowded sector

The Bank of Japan headquarters in Tokyo. (Photo by Rie Ishii) 

TOKYO -- The Bank of Japan said Tuesday it will increase incentives for financial institutions in the nation's overpopulated regional bank sector to improve their operations.

Under the new special deposit facility, a three-year measure, the BOJ will pay additional interest of 0.1% on the current accounts of regional banks held at the central bank. To be eligible, the institutions must raise profitability or improve operations through mergers.

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