Press Conference by the Minister for Financial Services

(Excerpt)

December 6 , 2002

Q.

There are news reports that Sumitomo Mitsui Banking Corporation (SMBC) is examining the possibility of purchasing Aozora Bank's shares. Have you received a report on this matter? Also, in relation to this, there are some news reports that the Financial Services Agency (FSA) is against the transfer of its shares to a foreign financial institution and prefers them to go to a domestic financial institution. Is this your view? Please elaborate on these two points.

A.

Firstly, I have been informed that SMBC has started such examination. However, we are not yet in the stage of receiving any reports in further detail.

As for Aozora Bank, it is not true at all that we, as FSA, have said which particular institution would be preferred or not. Basically, it is acceptable as long as it is thoroughly discussed by and between the parties. However, we hope governance will be solidly enhanced as a result, so that it will consequently lead to the strengthening and the stabilization of the financial system in Japan. That is all we have to say from our standpoint as a supervisor and inspector.

Q.

In the past, there were talks that Softbank would hold Aozora Bank's shares until Aozora Bank is publicly listed, or at least three years. What is your view on this?

A.

Basically, this is a civil matter, meaning that the judgment should be made by the parties under their own responsibilities, as a managerial decision. Therefore, FSA is not in the position to say anything as a supervisor.

However, as I have already stated, it is imperative that the management of the financial institution stabilizes as a result, to bring about stability in the financial system in Japan. We hope the parties thoroughly discuss with each other from such viewpoint.

Q.

In relation to this, can we presume that in your opinion, it does not matter whether the shares are purchased by a domestic bank or a foreign financial institution to bring about stability?

A.

It is purely a matter of management decision individually, so it depends on a case-by-case basis. Neither is necessarily good or bad.

Q.

We presume the basic stance was ''long-term shareholding would be preferred''. Are there any criteria for judging whether a bank or a fund would be preferred, regardless of whether it is domestic or foreign?

A.

Long-term shareholding is regarded preferable from the perspective that it would be better for stable management. Long-term shareholding is pointless if governance is not strictly implemented; in that sense, it should make it possible to strictly demonstrate governance, as I stated earlier. That is the crux of the matter.

Q.

Doesn't it matter whether it is a fund or a bank?

A.

Basically, it depends on how governance can strictly be demonstrated. Therefore, it would definitely be preferable and necessary to have the know-how to manage a bank, as bank management is involved. But in any case, it boils down to the real substance.