Press Conference by the Minister for Financial Services

(Excerpt)

October 31 , 2003

The Progress Report by the Working Group on Regulation of Capital Adequacy Ratio under the Second Subcommittee of the Financial System Council, released on July 28, 2003, urged to introduce effective measures to enhance the disclosure of information on the deferred tax assets, with the view to improving the credibility of the amount of deferred tax assets. Having examined the subject in response to the Progress Report, we plan on requesting today, that major banks enhance the disclosure of information on deferred tax assets, when announcing the interim financial results for the period ended September 2003 and thereafter. As this measure is aimed at improving the credibility of deferred tax assets, we also requested the banks to provide explanations in accordance with the calculation procedures, based on the disclosed figures and other data. After making these requests to the major banks, we plan to announce the details of the disclosure items this evening.

Q.

The credibility of deferred tax assets was questioned in the case of Resona Bank. To what extent can you eliminate the feeling of distrust by enhancing the disclosure? Also, please comment on the areas which require further action at this point of time.

A.

The gist of this measure is the disclosure of information on deferred tax assets. One of the extremely important aspects is that it aims to make deferred tax assets more predictable. Another aspect is that it aims to make the market rigorously evaluate their recoverability. The disclosure will be the biggest step yet in that context.

However, this will not be the solution to all problems. Issues on deferred tax assets, as well as issues on the enhancement of capital adequacy are important, which still need to be discussed thoroughly by the Working Group of the Financial System Council, in consideration of trends in the Bank for International Settlements and other trends.