Foreign Bank Agency Business

The Foreign Bank Agency Business regime (FBAB) was introduced in 2008. Until then, the Japanese Banking Act had not clearly set out provisions governing cross-border banking services, which had been provided by banks (Japanese and foreign) for many years. Japanese banks are required to make a filing. However, foreign banks are required to obtain approval from the FSA. Even though foreign banks already had an initial banking license, they had to obtain another FSA approval for acting as an agent or intermediary on behalf of their head office and branches outside Japan. In 2017, a partial relaxation was made where a foreign bank was allowed to obtain an approval for multiple branches at once, rather than for each branch. Remaining requirements include updating the detailed profile of each branch (i.e., the more global a foreign bank, the more onerous to keep up with changes in the profile), causing foreign bank to be selective in choosing branches covered by the FBAB. No other major country has such a regime requiring another license/approval in addition to the initial banking license granted. It is unnecessarily constraining foreign banks from flexibly providing services to Japanese customers.