The New York State Banking Department will open an office next year in Tokyo, acting Superintendent Elizabeth McCaul told bankers last week.
Ms. McCaul said the Tokyo office, the department's second outside the United States, will help enhance its "oversight of some of the larger New York banks that have a presence in Asia."
She said it should also help "improve our understanding" of Asian banks that do business in New York and reinforce relationships with the Bank of Japan, the Japanese Ministry of Finance, and other Asian supervisory authorities.
The New York department and the Office of the Comptroller of the Currency, the regulator of nationally chartered banks, both have locations in London. The New York State regulator uses its office there to coordinate activities with European regulators and to supervise U.S. banks active in the city and elsewhere in Europe.
The move into Japan has long been in the works, Ms. McCaul said, and was not connected to the financial turmoil in Asian markets.
However, she said the current crisis did serve to underscore the "interdependent nature of today's global marketplace" and the need for regulatory authorities to have operations overseas.
"Asian financial markets have become increasingly important to our institutions," she said. Although Tokyo "remains the preeminent financial venue in Asia," centers such as Singapore, Hong Kong, Bangkok, Seoul, and Taipei have also gained in importance, she added.
Ms. McCaul took note of observations by some analysts that banks share in the responsibility for the current crises in Asia because of their willingness to rapidly increase credit to borrowers in the region. "Effective bank regulation," she said, can play a role in "moderating excesses in the financial marketplaces."
Ms. McCaul confirmed that the department has been stepping up its scrutiny of foreign banks as well as U.S. banks with sizable operations in Asia in the wake of the crisis there, but she declined to go into detail about current investigations.
The New York State Banking Department supervises more than 70% of all foreign branch and agency assets in the United States. At the end of last year, 190 foreign-based institutions had offices in New York State, with almost $600 billion of assets.