(Bloomberg) -- Some of Japan’s regional banks are coming under pressure at their annual general meetings to show progress in cutting their cross-shareholdings. 

Institutional Shareholder Services, a US voting advisory firm, has recommended that Kyoto Financial Group Inc. President Nobuhiro Doi be denied a new term because of the bank’s holdings in major customers. 

Kyoto Financial owns stakes in clients including Nintendo Co. and Nidec Corp., two of the prefecture’s biggest companies. The market value of the lender’s strategic holdings amounted to a little over 1.1 trillion yen ($7 billion) as of March, bigger than its own market capitalization. The practice of so-called policy shares has been criticized as shielding management by providing a friendly shareholder base and for tying up capital that could be better used elsewhere.  

“We are committed to improving where we need to improve, asserting where we need to assert ourselves, and deepening our mutual understanding,” Kyoto Financial said in an email. 

Hachijuni Bank Ltd., based in Nagano prefecture, faces a number of proposals from LIM Japan Event Master Fund including that it cut its strategic shareholdings to less than 10% of its net book value. The bank’s management opposes the idea. 

Other regional banks are taking a proactive approach. Shiga Bank Ltd. and Bank of Nagoya Ltd., both based in central Japan, put their plans for reducing policy shareholdings in the invitation materials for their AGMs for the first time. 

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