Banks now have open policy on renting space

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Banks now have open policy on renting space

Banks struggling from loose monetary policy that has kept loan interest rates low can now generate profit from renting space in their buildings, thanks to a change in regulations earlier this month.

Starting July 30, banks will be allowed to rent out spaces in the buildings they own.

Initially, banks were banned from renting out space larger than the branch space where they were operating in the same building. This was to prevent the financial companies from speculating in the real estate market during a thriving real estate market.

However, after complaints that the restriction was too excessive, the government adjusted the regulations in 2014, allowing the banks to rent out space that was nine times larger than the branch office. For example, if a bank owns a 10-story building and uses the entire first floor for its branch, the bank can rent out the remaining nine.

Under the new regulation, a bank can now downsize its branch office and rent that space to other businesses, and even reconstruct the building it owns to increase the number of floors and rent them out as well.

Other changes include extending the time period of selling a building when a bank shuts down a branch office in the building it owns. Currently, when a bank closes a branch office, the bank needs to sell the building within a year. That time limit has been expanded to three years.

“We can’t continue with a regulation that was established when property speculation was competitively high,” an official at the Financial Services Commission said. “Profits are expected to increase significantly, since most of the buildings that the banks owned are located in popular areas.”


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