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Finance

Japan to rein in regional banks' overexposure to bonds

Financial watchdog aims to nudge banks toward lending operations

Japan's financial regulator aims to have regional banks focus more on local lending.

TOKYO -- Japan's financial watchdog will introduce new regulations limiting regional banks' investment in domestic and foreign bonds, with the ultimate goal of steering the institutions away from excessive risk-taking and back to core lending operations.

Under the Financial Services Agency regulations, to be introduced in fiscal 2018, banks will be required to limit valuation losses on their bondholdings to 20% of core capital.

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