Japanese regulator sounds out megabanks on China geopolitical risks: report

Its three megabanks have a total credit exposure of $64b to China.

Japan’s financial regulator has reportedly sent a request to its top banks to gauge their plans regarding rising China risks, especially should the Sino-Western tensions escalate, reports Reuters, according to multiple sources with direct knowledge of the matter.

The country’s three megabanks– Mitsubishi UFH Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group– have a total credit exposure of $64b to China, or roughly 1% of their total assets, according to the banks’ financial statements.

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The Financial Services Agency (FSA) is reportedly ensuring that the megabanks are thinking about the risks, and that they can respond should the geopolitical situation worsen, according to three sources cited by Reuters.

All the sources quoted by Reuters reportedly requested anonymity because of the sensitivity of the matter.

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A major risk for Japanese banks would involve US sanctions on China, said one of the sources, a financial industry executive.

Here’s more from Reuters.