Big Japanese banks cut JGB holdings to 3-year low - BOJ data

TOKYO Thu Aug 22, 2013 11:55pm EDT

TOKYO Aug 23 (Reuters) - Government debt held by large Japanese banks as of end June fell to its lowest level since March 2010, data released on Friday by the Bank of Japan showed, suggesting that the central bank's effort to increase lending may be showing some signs of success.

According to the data large Japanese banks, known as "mega banks," held 85.86 trillion yen ($870.75 billion) of Japanese government debt at the end of June, declining 7.4 percent from a month earlier.

The BOJ, as part of a very loose monetary policy aimed at reinvigorating the economy, has been trying to nudge banks away from assets like government debt and into riskier assets like foreign stocks. The central bank also wants banks to increase lending, using money parked in bonds.

"Bank lending is increasing, but considering that their holdings of foreign stocks have also declined, it is too early to say that the rebalancing of bank portfolios the BOJ would like to see is fully on track," said Teruyoshi Saotome, a senior bond strategist at Mizuho Securities.