Press Conference by the Minister for Financial Services

(Excerpt)

May 30 , 2003

Today, the Resona Bank made an application stipulated in the Article 105. 1 of the Deposit Insurance Law for recapitalization and submitted a business revitalization plan based on the Article 105. 2 of the law. Also, the Resona Holdings Inc. and the Resona Bank announced the new management of them.

I will explain an outline of the bank's plan. The material on the announcement was distributed to you for your information.

First, I will outline the application for recapitalization and the business revitalization plan submitted by the Resona Bank.

The amount of recapitalization is 1,960 billion yen. I understand that it is assumed that approximately 12 percent of its capital adequacy ratio is to be secured.

With regard to modalities, a combination of common stocks and voting preferred stocks was proposed by the bank. The Financial Services Agency (FSA) will fully examine the proposal, and basically, it is considered that the Government holds two-thirds voting rights by the combination of common stocks and voting preferred stocks.

Also, efforts for business revitalization were further considered such as the reduction of salaries for employees of 30 percent on average including stoppage of bonus, based on a restructuring plan announced from the Resona Bank on May 17. It seems that these efforts are as rigorous as the bank can take.

Second, I will explain new board members and the strengthening of corporate governance. Based on the recent determination on the necessity to take a measure to recapitalize the bank under the Article 102. 1. (1) of the Deposit Insurance Law at this time, the Resona Holdings and the Resona Bank will drastically restructure and strengthen their management as follows.

With regard to personnel affairs of board members, in order to facilitate management reform powerfully and speedily, the Resona Holdings and the Resona Bank hire Mr. Eiji Hosoya, a Executive Vice President of the East Japan Railway Company, from outside as chairman who has a representation right of both companies. Mr. Hosoya will be the head the board of both companies, as well as the chairman of board meetings.

Moreover, six persons who have superior knowledge and considerable experiences in management, legal affairs, finance and others from outside will be appointed as outside directors of both companies. As a result, a majority of the directors of both companies will be from outside.

In order to strengthen functions for surveillance and supervision of the management and to facilitate its swift decision making, both companies will move towards ''Company with Corporate Governance Committees'' at the regular general stockholders meeting scheduled for June 27, 2003. By this transition, three committees -- the Appointments Committee, the Auditing Committee and the Compensation Committee -- will be established, and a majority of their members will be from outside.

Finally, I would like to explain the schedule in the future. The FSA will closely examine this application for recapitalization based on the Article 105. 3 of the Deposit Insurance Law, make a determination on the recapitalization, and disclose the business revitalization plan in mid-June.

Following that decision, actual recapitalization will be implemented after the amendment of the articles of incorporation and others in a general stockholders meeting.

Q.

As you mentioned, the Government will hold two-thirds voting rights by purchasing common stocks and voting preferred stocks. What is the basis for such a conclusion?

A.

At least two-thirds voting rights are required to decide a special resolution, such as dismissal of board members and business transfer in a special case. Therefore, in order to ensure strong corporate governance, it is considered to hold two-thirds voting rights.

Q.

How do you participate in the process until the formal decision on recapitalization, such as an operation of the monitoring team of the management?

A.

One of our greatest concerns has been the establishment of the new management. Especially, it was determined to recapitalize the Resona Bank whose capital went below 4 percent. I thought it was necessary to prevent a blank in governance. Therefore, right after the meeting of the Financial System Management Council, the President of the Resona Holdings and also the President of the Resona Bank were appointed from within the companies. I think this transition has been operated smoothly until today's application, while consulting with both presidents and the monitoring team of the management. Today, the new management setting the new chairman as its core was announced, and I expect Mr. Hosoya, the new Chairman, and the other new members to establish a more aggressive and more ambitious management system. We will continue to participate in the bank's operations as needed. I wish that the bank will establish a sound management system, while distinguishing between governance and autonomy clearly.