Press Conference by the Minister for Financial Services

(Excerpt)

May 17 , 2003

We received a report from the Resona Bank a while ago. According to the report, its capital adequacy ratio at the settlement accounts as of March 2003 went below 4% which is the minimum requirement for sound domestically operating banks, and became approximately 2%. The Government recognizes the need to take a full-scale measure to prevent the decline of the bank's capital adequacy ratio from seriously affecting the maintenance of orderly functioning of the financial markets in Japan and in local areas where the bank is operating. Therefore, a meeting of the Financial System Management Council will be held at 18:30 today. The Council will deliberate a measure under the Article 102. 1. (1) of the Deposit Insurance Law, a determination on the necessity to recapitalize the Resona Bank.

Moreover, we made a request with the Ministry of Finance for the special loans by the Bank of Japan as needed based on the Article 38, 1 of the Bank of Japan Law.

Although the Resona Bank is not faced with any liquidity problem at present, the Government is to continuously make assurance double sure.

Q.

When the March Crisis was mentioned, you and the Prime Minister said that a crisis would never be caused. A meeting of the Financial System Management Council will be held this time, the Government, we think, has declared a crisis in a sense, and this may arouse concerns about the financial system among other financial institutions. How do you think about this matter?

A.

We would like you to have a correct understanding of the situation. The meeting will be held this evening, but the measure to be discussed is for recovery, not for concerning a failed financial institution. As I mentioned before, the bank is not faced with any liquidity problem, deposit drain and others. We do not, by any means, regard this as a crisis. If no measures is taken, however, there is a possibility that some troubles arise. Therefore, the meeting will be held to prevent such a possible trouble. This will show you, hopefully, that the Government is taking a necessary action to prevent a crisis.