Stricter capital requirements in Japan for banks may limit the amount of money they can invest in hedge funds, the International Herald Tribune reports.
Large institutions may have to cut back on such investments, while smaller banks may have to eliminate them altogether.
Beginning in March, banks will have to comply with Basel II risk standards that will require larger reserves against both loans and investments.
Japanese investors, largely institutions, have quadrupled their investments in hedge funds from $8.75 billion at the end of 2000 to $35 billlion, according to the Bank of Japan.
The 111 smaller, regional banks in the nation, which hold 36% of the Japan’s $6.7 trillion in assets, cannot manage the risk, said Shin Kumashiro, senior manager in the alternative investing unit of Sumitomo Trust & Banking.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.