In 1984 a group of individuals from 12 foreign commercial banks decided that there was a need for a trade association to represent the needs of the foreign banking community in Japan. The association was originally called the Institute of Foreign Bankers (IFB) and quickly grew to include 30 members. A governance structure was put in place and four areas of mutual interest were identified: personnel, productivity, regulatory issues and financial markets.
In the early days the IFB did not have an explicit advocacy role. There was a concern amongst members that taking a collective approach would weaken individual firms' relationships with the Ministry of Finance, who were the regulators at the time, and that the Association's leadership would be exposed to unacceptable levels of risk. But nonetheless the IFB did engage in a dialogue with the Japanese authorities. The IFB also began its programme of providing training and other information events for members; pooling resources to provide English translations of relevant documents and shared legal services; and members were able to share experiences and knowledge and have networking opportunities. All these activities continue to this day.
A significant change to the financial markets in Japan came in 1996 when the Japanese Government introduced a number of regulatory reforms known as the ‘Japanese Big Bang’ with the aim of liberalising the financial markets. At this time the number of foreign banks in Japan was at its peak. In 1997 the association had 97 foreign banks including 18 representative offices. But many of these global banks subsequently merged which reduced the number of foreign institutions in Japan. Also a number of firms closed their representative offices.
In 1998 the association decided to expand its membership to include financial groups (i.e. organisations with a bank and securities entity) and also to change the name to the International Bankers Association (IBA).
The Association also began to consolidate its role in Japan as a voice for the international banking community. The Economic Planning Agency – which subsequently became part of the Cabinet Office – asked the IBA’s Chairman to give the foreign banking community perspective on the ‘Japanese Big Bang’ and he set out a number of policy suggestions.
To manage the Association’s advocacy activities more effectively, IBA members voted in 1999 to formally revise the by-laws to allow the IBA to make presentations to other institutions or bodies and promote the interests of its members. And in a sign of its growing desire to play a greater policy role, it amended its rules in 2001 to allow for increased advocacy with Japanese government authorities and other organisations.
The Securities Sector and Banking Sector Committees
In the late 1990s there was a global trend towards firms moving from traditional commercial banking to include investment banking in their activities. To accommodate these developments, in 2000 the IBA established additional membership categories for financial groups and securities firm members. In 2002 a Securities Sector Committee was formed to address issues specific to securities firms and a full-time director was hired in the Secretariat to manage the SSC’s activities. A corresponding Banking Sector Committee was formed in early 2004 to address regulatory and market issues of concern to IBA member banks.
Recognition as the voice for the international banking community
From the mid-2000s there was increased interaction with senior members of the regulatory authorities. The FSA Commissioner gave an address directly to IBA members for the first time in November 2006 and the first FSA-IBA dialogue was held in April 2007. At the November 2007 AGM a special address was given by the Minister of State for Financial Services and Administrative Reform and in June 2008, at the invitation of the BOJ, the first of a regular set of meetings with the BOJ Governor was held. These meetings with the regulatory and monetary authorities evolved into the formal dialogues that continue to the present day.
Banks and securities firms are supported in their activities by companies who provide a wide range of services. In 2005 the IBA established a membership category (now called associate members) for these firms whose services include financial consultancy, legal and tax advice, ratings, financial IT services and exchange services. Associate members have increasingly played an active role in the Association and the full range of Associate members can be found here.
Fully incorporated in Japan
With the extension of its activities the IBA needed to have a legal status but it was not possible at that time for the association to do this under Japanese law. So to rectify this position a service company was created in 2004 which was a Japanese branch (IBA Services Ltd) of a company headquartered in the Cayman Islands. But with a change in the Japanese law and a commitment to the Japanese market, in 2013 the Association became a general incorporated association and changed its English name to the International Bankers Association of Japan (IBA Japan). In Japanese it is known as Ippan Shadan Hojin Kokusai Ginkokyokai. Follow this link to find out more about our governance arrangements.
The Japan Financial Markets Council
Post the financial crisis of 2008 national and global authorities have been setting out a new regulatory framework to tackle some of the problems that have emerged. Firms operating in the Japanese capital markets (both Japanese and international) have interests in what this new global regulatory regime will look like. IBA Japan, represented by five of its members, decided to make an alliance with five major Japanese institutions and formed the Japan Financial Markets Council (JFMC) in 2012. Since its inception the JFMC has been involved in a commenting on global regulatory and other issues from the perspective of Japanese market participants. The Secretariat has been supplied by IBA Japan and the JFMC has a memorandum of understanding with the Global Financial Markets Association (GFMA). Follow this link to find out more about the JFMC.
IBA Japan today
The Association has served the foreign banking community through the emergence of the Japanese bubble economy, the ‘big bang’, the ‘lost decade’, and now ‘Abenomics’. The size and structure of the foreign banking community has changed through this period often responding to macro-environment and global trends.
Today IBA Japan has just under 60 banking members from 22 countries and over 25 associate member firms. It is an important voice that represents the views and priorities of the foreign banking community in support of its goal: to promote a strong and efficient financial sector and support members’ business interests. It has a strong and active membership; it carries out wide ranging policy and advocacy work; and also provides many services for members. After 30 years it has established itself as a well-respected body that will thoughtfully represent the views of the foreign banking community in Japan. Follow this link to find out more about our activities.