Press Conference by the Minister for Financial Services

(Excerpt)

17 July, 2001

Q.

In regard to the review of the capital-injected bank's plan for restoring sound management, 11.7 trillion yen worth of non-performing loans are classified as ''in danger of bankruptcy'' and below, which need to be removed from major banks' balance sheets. In order to remove this within three years, the banks must dispose of almost 4 trillion yen worth of NPLs per year, excluding new NPLs. As the net business profits of major banks are just over 3 trillion yen, they must make another trillion yen somehow. Do you think they can raise that sort of money through restructuring efforts?

A.

Major banks must do their best to finance the disposal of NPLs based on their net business profits, to the greatest extent possible. It goes without saying that they should take the courage to make further restructuring efforts, which is a logical measure from anyone's point of view.

In addition, although it might generally be difficult to raise profits amid the recession, I believe there are many ways to break through. Whether they would immediately relate to the banking business, which is ridden by issues as currently pointed out, is a difficult question to answer. However, considering that higher-priced non-banks appear to be yielding profits and some financial institutions led by foreign companies are earning profits from NPLs themselves, we would like major banks to demonstrate their creativity in raising profits in such a manner and concentrate more on increasing their net business profits to begin with.

The disposal of NPLs in the subsequent stage should be left to each bank, for them to make various efforts and take a wide range of measures on an individual basis.