In Japan, details were being finalized last week of a plan in which several regional banks will join forces to securitize loans by small and medium-sized entities. The Nago City Government, located in Okinawa Prefecture, invited several banks to take advantage of its status as one of Japan's deregulated zones for financial transactions by establishing a special purpose company in the city.
By pooling together the loans, banks can take advantage of tax advantages in the city to set up an SPC, a process much cheaper than securitizing individually. At least seven banks, including Hiroshima Bank and San-in Godo Bank, will sign up for the program, which could be worth anything between 20 billion ($194.6 million) and 100 billion. An inaugural transaction is expected in June.