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Japan probing regional banks for overexposure to foreign debt

Addressing concern over mounting losses due to rise in US interest rates

Japan's Financial Services Agency is conducting a first-of-its-kind probe on regional banks.

TOKYO -- Japan's financial watchdog is launching audits of regional banks seen saddled with significant paper losses after shifting from Japanese government bonds to higher-yielding foreign debt and complex instruments.

The Financial Services Agency will first conduct on-site inspections of asset-management divisions at around three regional banking groups, widening the probe if needed. The targets will likely be banks owning a large proportion of foreign bonds.

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