If we calculate the Tier 1 capital of internationally active Japanese banks according to the US standard, it would decline from 6.6% to the 4% level. Indeed, there is clearly a big difference in the capital structure between major Japanese banks and US money center banks.
In other words, there exists a difference, significantly larger than what is observed, between Japan and the United States in terms of the strength of banks’ capital position. Under such circumstances, Japanese banks need to strengthen capital base by increasing its key element.