2/86 INTERNATIONALIZATION OF JAPAN'S CAPITAL MARKETS

Japan and the People's Republic of China have agreed to permit the banks of the other to upgrade their operations in Japan and China to branches from representative offices.

Local banks and mutual banks have been stepping up their international operations. Local banks in 1985 established one foreign subsidiary, and two branches and eight representative offices abroad. The bank of Yokohama now has three branches overseas and Shizuoka Bank one. The Bank of Yokohama also has three overseas subsidiaries now. Local banks opening representative offices abroad include the Bank of Yokohama, the Hokkaido Bank, the Hiroshima Bank, the Nishi Nippon Bank, the Shizuoka Bank, the Chiba Bank and the Fukuoka Bank.

The Secirities and Exchange Commission of the US has asked for the cooperation of the Ministry of Finance and the Tokyo Stock Exchange to help the international monitoring of insider trading on companies now listed around the world.

Nomura Securities and Yamaichi Securities have reached agreements to establish joint ventures with American investment banks in order to advance into the international leasing business.

Japanese city banks, using their very high credit ratings are capitalizing on the credit rating problems of major American banks to gain larger shares in the area of guaranteeing local government bonds in the US. In 1985 the Japanese banks were able to make $35 billion in such guarantees, three times the level of a year earlier. The banks obtain a commission of about 0.4% on the amount they guarantee and feel they are getting a good income for only using their names.

JAPAN LAWLETTER, February, 1986. By Roderick Seeman