Life insurers are being swayed to back efforts by the Financial Services Agency (FSA) to reform regional banks of which the insurers are often top shareholders.
The FSA is effectively asking the insurers to step up oversight, reported Nikkei Asian Review.
The agency discourages life insurers from having cozy relationships with investment targets, pressing them instead to monitor management as an institutional investor entrusted with managing assets paid by customers as premiums.
The FSA is using the new stewardship code for institutional investors, revised in May, to nudge life insurers and others to disclose specific votes they cast at shareholders' meetings or otherwise explain the decision not to. Thus, life insurers are coming under scrutiny as institutional investors.
Meanwhile, one of Japan's largest life insurers, Nippon Life Insurance, has decided to not to disclose how it votes. "We'd like to carefully gauge the impact" of the just-introduced code, Nippon Life President Yoshinobu Tsutsui said.
Given its substantial presence in the stock market, the insurer decided that the disclosure would hamper the mid- to long-term growth of companies by spurring short-sighted trading based on the publicised votes.
Trust banks are also being roped in by the FSA. At the same time, the Government Pension Investment Fund has asked trust banks and asset management companies that manage equities on its behalf to disclose specific votes. One of its key criteria of choosing asset managers is their efforts to comply with the stewardship code.
Japan‘s regional banks, which number more than 100, are trying to cope with weaker loan demand from a dwindling population, particularly in rural areas, and from narrow lending margins.