Japan’s financial system is expected to enter a virtuous circle in which the monitoring function of the market and more intensified competition will effectively encourage banks to take further actions to reduce their outstanding NPLs. Resona Group substantially increased its loan-loss provisioning in an attempt to drastically shorten the time required to regain financial soundness, and this attracted considerable attention in the market.
The new management seems to have decided to take actions that put the highest priority on the prompt recovery of its credibility in the market after receiving public funds. We commend its actions as representing a bold step toward dealing with its problems. B.