Press Conference by the Minister for Financial Services

(Excerpt)

(09:30 to 09:42 on April 25 (Fri.), 2003, in the Diet Building)

I have an announcement to make before answering your questions. With regard to the Program for Financial Revival, we have been taking a number of measures following the Work Schedule to promote tighter assessment of major banks assets. Measures include another round of special inspections, establishment of a special team to examine debtors' reconstruction plans, and revision of the inspection manual to incorporate the application of discounted cash flow (DCF) type method for provisioning purposes.

Following the recent completion of the special inspections, we have decided to disclose the result and present a prospect of the outcome of the application of the DCF type method. The Inspection Bureau will hold a briefing on this issue this evening.

Q.

We have learned from a media report that surprise inspections are being carried out concerning major banks' capital replenishment. Will you give us a comment on the matter?

A.

This February, we created a guideline governing stock allocation to a third party following to the Program for Financial Revival. Meanwhile it is a known fact that a number of bank groups have recently, and at about same time increased their capital to reinforce their net worth.

In response to such move, we set out yesterday to examine holding companies of major banking groups to check their compliance with statutory provisions and regulations on capital increase. Inspections to holding companies of major banking groups are conducted as a part of our year round inspections.

Also, we have started on-site inspections at a number of member banks of these groups simultaneously to examine compliance issues.