Establishment of foreign-owned trust banks and the Japanese version of the "Big Bang" financial deregulation

Economic developments in Japan prompted consideration of opening financial markets between Japan and the U.S. in 1984. Japan agreed to foreign banks' request to be allowed to participate in the trust business. As a result, foreign-owned trust banks were established in 1985.
The Financial System Reform Act came into force in 1992, allowing banks to establish subsidiary securities companies and subsidiary trust banks. In addition, securities companies were allowed to establish subsidiary banks and subsidiary trust banks, which led to cross-participation in other sectors' business areas.

This act came into force in April 1993 when subsidiary trust banks were established by banks and securities companies. In addition, regional financial institutions were allowed to conduct certain trust operations at the parent level. Consequently, regional banks became new participants in the trust business.

In addition, the system of Agent for Trust Agreement was implemented in 1993 so that regional financial institutions could operate the Agency for Trust Agreement in regional areas. Steady progress occurred in the liberalization of the trust business that subsidiary trust companies and regional financial institutions could operate beginning in March 1998. All operations were allowed by February 2002, except for certain trust operations and concurrent business.

Furthermore, though the February 2001 partial amendments to the Ordinance for Enforcement of the Concurrent Business Act allowed city banks, long-term credit banks, and Norinchukin Bank to participate in trust business by themselves, the ability to be Agents for Trust Agreement was expanded to financial institutions, such as city banks under the February 2002 Ordinance for Enforcement of the Concurrent Business Act.

In addition, trust banks specializing primarily in the asset administration business have been established to unify the administration of securities targeted for investment by trust banks and others.

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