Press Conference by the Minister for Financial Services

(Excerpt)

7 December, 2001

Q.

We would like to hear how you assess and what you think about yesterday's failure of Aoki Construction Corporation.

A.

I'd like to refrain from making comments about a specific company.

In general, however, Needless to say, the event reflects the stance of the banks to disposal of bad debts. I think that we would be able to regard this as an example that shows that banks are now well prepared to solve bad debt problems.

Q.

You have just said the banks are well prepared to dispose bad loans. The stock prices of companies, however, thought to be problematic are falling today. Please tell us your idea about measures to overcome bad loan problems for the future, influences on the banking sector, and the necessity of another injection of public funds as some people are talking about.

A.

I have not heard in detail about the prospects for losses on disposal of the bad debts at their full-term book closing, so I cannot tell with any specific cases in mind. However, as a matter of course, I expect that it is probable that banks will make decisions on whether they should keep weak businesses, especially those in structurally slump sectors, alive as part of solutions of bad loan problems.

From my general observation, as for influences on banks' financial conditions, losses on disposal of bad loans are likely to be absorbed in their current fiscal year's forecasted losses because banks have already increased their provisions considerably based upon their full-term forecasts.

Q.

Some executive members of LPD say the lifting of the freeze on the limited deposit guarantee system should further be postponed. Please give us your views about this.

A.

We are now preparing for the lifting because the problem that led to the current freeze have been solved. We, of course, are not going to change our policy to complete preparation by the deadline, and lift the freeze.

Especially, safety nets have been constructed, and so individual collapses will not cause any disorder. Therefore, we consider that it is appropriate to lift the freeze as scheduled.