Japanese bank trains staff for a novel scenario: positive interest rates

Kyoto Financial

18/03/2024 02:57

By Takahiko Wada and Leika Kihara
       TOKYO, March 18 (Reuters) - As Japan nears an end to
eight years of negative interest rates, a regional lender in
Kyoto is offering e-learning to train up staff who have no
experience lending money or collecting deposits in a positive
interest rate environment.
    One of the sessions, targeting roughly 3,300 Bank of Kyoto
 5844.T  employees, explains why interest rates are important,
how the lending rate is set and how rising interest rates affect
the bank's business and its clients.
    In other sessions, the bank's older executives with
experience of the days when Japan had positive interest rates
share their know-how on convincing borrowers to swallow higher
charges.
    The e-training, which is offered in sessions of about 30
minutes viewable on smartphones, also aims to get younger staff
geared up for intensifying competition to attract deposits,
which until now had been a liability as lenders sat on a huge
pile of money.
    Other sessions offer more practical guidance on how to
explain to borrowers that lending rates will rise and to
increase deposits through better communication with customers.
    "It's pretty basic because we want younger staff, in
particular, to understand what it's like in a world where
interest rates are positive," Tadashi Shimamoto, deputy general
manager at Bank of Kyoto's human resources and general affairs
division, said in an interview.
    "It's crucial to have our staff understand that things are
quite different when interest rates rise, and to change their
mindset so we're ready when the moment comes," he added.
    Japan has seen its policy rates stuck at or below zero for
decades due to prolonged low inflation and economic stagnation.
    In the meantime, ordinary depositors have received only a
tiny amount of interest on savings and mortgage rates have been
very low.
    But with inflation exceeding the Bank of Japan's (BOJ) 2%
target for over a year, the central bank is seen pulling
short-term interest rates out of negative territory as early as
Tuesday.
    Any such move, which would be Japan's first interest rate
hike since 2007, will likely force lenders and borrowers to
overhaul their planning based on the assumption that cheap cash
would remain abundant for years.
        Bank of Kyoto hired about 150 new graduates last year,
and plans to hire another 180 this spring. The lender said it
began preparing the e-learning sessions from the start of this
year, when the BOJ began dropping hints of a near-term end to
negative interest rates.
    "For our younger staff, interest rate have been stuck at
zero throughout their career, so it's the first time they will
see rates go up," Shimamoto said. "It's uncharted territory, a
whole new world for them."

 (Reporting by Takahiko Wada and Leika Kihara; Editing by Jamie
Freed)
 ((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))