Press Conference by the Minister for Financial Services

(Excerpt)

February 21 , 2003

Today, we plan to obtain and announce the final draft of the Guidelines for Supervision on capital increase through the allocation of new stocks to a third party, which were incorporated in the Program for Financial Revival in October 2002 and are due to be implemented during the fiscal year according to the work schedule. The Financial Services Agency (FSA) is making efforts to fulfill the Cabinet's policy to bring the non-performing loan (NPL) problem to an end by FY2004 based on the Program for Financial Revival. I am also aware that the major banks are announcing and working on new management reform plans including restructuring and recapitalization, in order to facilitate the disposal of NPLs and strengthen the management basis.

I have repeatedly stated that we would perform checks in view of ''3 Ss'' so that such efforts in management reform would yield proper results. The point is whether they are Strategic, Sound and Sincere. Based on this viewpoint, with respect to capital increase through the allocation of new stocks to a third party, it is necessary, firstly, to ensure soundness as capital in consideration of the Commercial Code, etc., and secondly, to deal with investors in good faith, such as not to abuse their dominant position as referred to in the Anti-Monopoly Law, and to perform disclosure properly. We are compiling the guidelines based on such an approach.

Q.

In relation to life insurance companies, the three ruling parties agreed the other day to consider the issue concerning the guaranteed interest rate separately to the safety-net issue. As for the safety-net issue, will a bill be submitted to the Diet by the submission deadline in mid-March?

A.

As for bills unrelated to the budget, the submission deadline for the Government is mid-March. We would like to make preparations for laws relating to the safety net for life insurance companies in consideration of this submission deadline.

Q.

With respect to the other issue, which relates to the guaranteed interest rate, the ruling parties seem to be inclined to submit a bill around late April or May. Is the FSA going to continue examining this, targeting around late April?

A.

In regard to the issue of the guaranteed interest rate, as I have stated several times, the FSA has not decided its policy directions in concrete terms at this stage and further examination is required broadly. As pointed out, the ruling parties are also having discussions in various aspects. We would like to deal with this while consulting with the ruling parties.

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