Japan regulator to scrutinize megabanks’ lending to U.S. funds

Japan’s financial regulator plans to examine banks’ lending to private equity and other funds in the U.S. and elsewhere to determine whether they have proper risk management.

Toshinori Yashiki, a senior official at the Financial Services Agency, said the business has attracted attention because the country’s largest banks are increasing what is known as subscription finance and lending to funds that provide equity or credit to private companies.

“It’s necessary to check if there is effective governance and risk management that’s appropriate for rapidly expanding products,” Yashiki, director-general of the agency’s strategy development and management bureau, said in an interview.