Apr.14.2008

Japanese Bankers Association

Study Group Report on Desirable Sharing of Corporate Customer Information between Banking and Securities Businesses Released

JBA released the report compiled by the Study Group on Desirable Sharing of Corporate Customer Information between Banking and Securities Businesses on April 15.

In December 2007, the Financial System Council recommended that the firewall regulation be eased to allow the sharing of corporate customer information between banking and securities businesses on the condition that customers be given the opportunity to opt out. In conjunction with this step, a study group was established at JBA to examine the duty of banks to maintain confidentiality on their own in private law amid the easing of regulations.

The report examines mainly corporate customer information and discusses the relation between sharing of information within a financial group and duty to maintain confidentiality as follows.

(1)The sharing of corporate customer information for the sake of corporate compliance without customer consent may be allowed in principle, as financial groups are required to conduct proper risk management to protect depositors.
(2)The sharing of corporate customer information for the sake of marketing may be highly appraised on recognizing it as an exception to the duty of the institution, as it aims to provide high quality financial services that meet customer needs.
(3)Problems arising from the information sharing, such as harmful conflicts of interest, abuse of dominant positions, or insider transactions, are not directly related to the issue of the duty to maintain confidentiality. However, parties concerned should implement necessary measures and pay due consideration for customers in daily business to erase customers’ concern for these problems.
(4)Giving an opportunity to corporate customers to opt out may be desirable, as it would be useful to prevent problems without losing reliability in financial institutions and help avoid the problem of the duty.