Press Conference by the Minister for Financial Services

(Excerpt)

1 February, 2002

Q.

Generally speaking, should major banks, securities companies and insurance firms that are currently having difficulties in reestablishing themselves on their own exit the market? Or should they be saved through integration and alliances? What is your view?

A.

I acknowledge that major financial institutions are working hard in their respective ways. As I have clarified repeatedly at the Diet and on other occasions, in response to the current market situation, the institutions are going through special inspections conducted by FSA and taking actions such as subdividing their internal ratings for even those borrowers which are classified as ''needs attention'' and others so as to effectively deal with the non-performing loans (NPLs). Consequently, their losses on the disposals are expected to grow. Although the estimates will not be conclusive until the results are out, as the losses on the disposals might increase and the inspections are still under way at the moment, the present outlook is that it is unlikely for capital shortage to occur or the capital ratio to come down close to 8%.

While terms like ''crisis'' and ''instability'' are being used extremely widely in the general public, if there were one thing that I should be particularly worried about at the moment, I think it might be the price of stocks in their portfolio. The price of stocks in their portfolio marked 9,774 yen at the end of September 2001, and we are formulating various projections based on this assumption. What would happen is up to the market, but our current assessment is that there is no need to consider any catastrophic scenario.

Therefore, we believe it is important to continue to ensure the disposal of NPLs by the very actions that are currently being taken by the institutions.