Following 全東信's bankruptcy, the Financial Services Agency asked regional banks in writing to strictly monitor the financial conditions of their borrowers. The aim is to prevent large loan losses as lending across prefectural borders becomes more active.
The Financial Services Agency has asked regional banks in writing to strengthen their oversight of borrowers' financial conditions following 全東信, based in Osaka, entering bankruptcy proceedings.
Multiple financial institutions have disclosed that claims against 全東信 could not be collected or might be delayed. The request reflects an intention to thoroughly assess borrowers' financial conditions against the backdrop of increased lending across prefectural borders.
The Financial Services Agency plans to strictly monitor screening systems at loan origination and the management of borrowers' actual financial conditions, and is calling for risk-appropriate measures, including provisions and collateral. It is also expected to make the same request to shinkin banks and credit cooperatives.
全東信 mainly provided payment processing services to restaurants and is said to have earned fees by paying merchants before the card companies did. It is suspected of having falsified its financial statements for many years.