Many Japanese financial institutions appear to have been relying too much on real estate collateral and personal guarantees when providing loans especially to medium and small firms, and governance after loan provision has not necessarily been sufficient. Financial institutions are required to bolster firms’ growth constantly through deepening the ongoing relationship with them.
For all of the reasons I have discussed, it seems reasonable to expect a continued high level of merger activity for the foreseeable future. Very large mergers will not be uncommon. Studies based on historical experience suggest that in around a decade there will likely be about 3,000 to 4,000 banking organizations, down from about 7,000 today.