Press Conference by the Minister for Financial Services

(Excerpt)

3 August, 2001

Q.

What is your overall judgement on the banks' restructuring plans announced yesterday, in terms of their accumulated non-performing loan disposal or profitability improvement measures, for example?

A.

Well, personally, I am desperate to see Japanese financial institutions clean up the non-performing loans soon and regain the excellent international reputation quickly that they, especially the major banks, enjoyed in the past, which is a wish felt by the whole government as well. In this regard, I think they are currently going through a kind of a foundation-building stage towards this goal. What I mean by that is, through those restructuring plans, the financial institutions are each presenting the results of their various efforts they've made by applying various recent government-initiated measures and the so-called ''Big-Boned Policies'' (Outline of Basic Policies for Macroeconomic Management and Structural Reform of the Japanese Economy), as well as other earlier policies included in the Emergency Economic Measure.

While it is quite hard to make a judgement on these plans, I have a strong anticipation towards the full realization thereof, first and foremost.

Q.

You've just said it is necessary that the restructuring plans be fully realized. Then I take it you're now satisfied with these restructuring plans presented this time, am I correct?

A.

That kind of understanding is exactly what I wanted to avoid by saying what I said. Overall, as I just mentioned, one of the signature aims of the plans is for each bank to speed up the process of cleaning up their non-performing loans in a major way during 1, 2 or 3 years to come, as is pointed out in the Big-Boned Policies. If those institutions make efforts to improve their net operating profits well enough, they'd become able to grapple with the bad loan problem at full strength, and the public would recognize such efforts. What I was trying to say is, I am hopeful that they realize this through these plans.

Q.

I don't understand. Well, if they manage to realize that, that'd be a major improvement for sure. However, looking back at the past eight years, it has been proven that their net operating profits alone are not enough to clean up the non-performing loans. So I take it you'd be satisfied if the plans just announced get implemented, do I get this right?

A.

Satisfied... well, let me see. As I already mentioned, I believe satisfaction can be reached only when the whole thing gets totally done and the Japanese financial institutions, especially the major banks, get to enjoy a decent international reputation as they did in the past. I feel the word 'satisfaction' is not exactly appropriate for now when we are still working hard for the removal of bad and negative assets, which is why I have been constantly reluctant to use that word.

Q.

Then, if those institutions can regain such international reputation in the future, you'd be at least happy if not satisfied, right?

A.

Naturally, yes. 'Happy' is a state of mind that I could be in when I see such a situation come true.