TOKYO, March 16 (Reuters) - An advisory panel to Japan's Financial Services Agency (FSA) is to propose the first shake-up of the agency in two decades on Friday, aimed at strengthening its operations through a merger of two key bureaux, two officials directly involved with the matter told Reuters on Thursday.
As part of the proposals, the FSA will set up a Financial Monitoring Bureau by combining the Inspection Bureau and Supervisory Bureau as early as July 2018, the officials said, requesting anonymity because they are not authorised to speak to media.
The proposals come at a time when banks, particularly small ones, face interest rate risks and the FSA pushes for consolidation of regional banks.
If approved by the FSA head, this would mark the first major reshuffle of the agency since it was established in 1998 by taking over the then Financial Supervisory Agency.
A final version of the draft proposals, viewed by Reuters, also called for strengthening of monitoring functions.
The FSA has sought ways for the two bureaux to act as one in monitoring financial institutions while grasping various risks at an early stage and responding to new business needs.
However, a swift response has been deemed difficult as long as the bureaux in question are vertically divided, they said. (Reporting by Takahiko Wada; Writing by Tetsushi Kajimoto; Editing by Nick Macfie)