What is the Japanese Bankers Association (JBA)?

Published by Thomas Herold in Banking, Laws & Regulations

'Japanese Bankers Association (JBA)' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The Japanese Bankers Association is also known by its internationally recognized acronym the JBA. This is the elite financial institutions’ umbrella organization. Its membership is comprised of bank holding companies, banks, and banker associations throughout Japan. Their purpose is to promote planning for the best operating of payment systems, to reinforce compliance and promote CSR, to encourage appropriate transactions for consumers, and to support the individual banking endeavors and operations of its member banks.

Every year the Japanese Bankers Association elects both a chairman and a number of vice chairmen to oversee the organization. It is the JBA’s Board of Directors which confers each March to hold this election. The various board members actually vote to decide who will become the two heads of the umbrella banking organization. President and Chief Executive Officer Takeshi Kunibe of Sumitomo Mitsui Banking Corporation is the current chairman of the JBA, as of February 2017.

In Japan, the various financial institutions are actually broken down into a few important categories. These groupings come from characteristics which include either the historical backgrounds or the primary business functions of the institutions in question. Such categories include city banks, regional banks, and member banks from the Second Association of Regional Banks (or regional banks level II). These are not legally binding definitions. Instead they are classifications used to help with publishing statistics and administration efforts.

City banks prove to be extremely large in their geographical representation and size. Their headquarters lie in the major cities of the Japanese islands. They also boast branches in the important and large population centers of Tokyo, Osaka, and other important cities and surrounding suburbs. Today there are only five of the large and impressive city banks remaining in Japan. These are as follows: Bank of Tokyo-Mitsubishi UFJ, Resona Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and Saitama Resona Bank. Mergers and acquisitions in the field have helped to narrow this important category down from the original 13 city banks to the present five.

By contrast, regional banks are typically found and headquartered within the primary city of a given prefecture in Japan. They naturally conduct the overwhelming majority of their business endeavors in their home regional prefecture. It follows that they would have important local ties with area governments and locally based businesses. Today’s Japan boasts 64 regional banks such as Hiroshima Bank, Shikoku Bank, and Bank of Okinawa.

The final category of the Japanese based banks is the regional banks level II. Such financial institutions tend to provide services to individuals and smaller companies in their principal geographical regions. The vast majority of the Regional Banks II was once mutual savings banks at some point. There are 41 Regional Banks II in Japan today. Among them are banks including Towa Bank, Aichi Bank, and Ehime Bank.

The banking classification picture has become more clouded in 1999 with the rise of certain specialty financial institutions which were not traditional banks at all. These entered into the banking universe in Japan through founding different kinds of banks like those which are internet based or specialize in settlements. They do not fall under a traditional category of the three mentioned above and so are referred to by the Japanese Bankers Association as “other banks.” There are five banks in this non-traditional banking category. These are as follows: Citibank Japan, Aozora Bank, Norinchukin Bank, Shinsei Bank, and Seven Bank.

There is only one single foreign based banking member of the Japanese Bankers Association today. This is the United States’ headquartered JP Morgan Chase Bank, National Association. Citibank Japan is of course classified as one of the “other banks” so does not fall under this category as determined by the JBA.

One of the primary ancillary functions of the Japanese Bankers Association is to calculate up and publish the JBA TIBOR. Since 1995, they have released this Japanese Yen TIBOR rate as well as the Euroyen TIBOR rate from 1998. Such rates reveal the unsecured call markets’ prevailing rates as well as the interest rates on the offshore market.

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The term 'Japanese Bankers Association (JBA)' is included in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.