Press Conference by the Minister for Financial Services

(Excerpt)

February 6 , 2004

The draft of ''Law on the Special Measures for Strengthening Financial Functions'' and that of ''Law on the Partial Amendments of the Deposit Insurance Law'' were adopted at the Cabinet meeting today.

I would like to report one thing.

On December 17, 2003, we ordered the Ashikaga Bank to compile a business plan based on the Article 115 of the Deposit Insurance Law. The bank has been working hard to develop the plan under the new management team led by the President, Norito Ikeda, and the plan will be publicly announced this evening after the resolution by the Board of Directors.

We hope the Ashikaga Bank would try to promote management reforms to restore its soundness under the new management team in accordance with the business plan decided today. We also expect the bank to enhance its profitability and to improve its corporate value by facilitating regional finance and revitalizing small- and medium-sized enterprises aggressively.

Q.

What do you expect for the draft law on the special measures for strengthening financial functions adopted at the Cabinet meeting today?

A.

Amid accelerating of balance sheet adjustment at firms and banks in Japan, the crucial challenge is to further strengthen financial functions and to make the system which can manage further risks in this severe deflationary economic situation.

From this viewpoint, it is substantially important to make a scheme which the Government may take a stake in financial institutions which can carry out management reforms for the purpose of strengthening financial functions and support the whole financial sector by strengthening financial functions. We will continue to make efforts in this context steadily.

Q.

The draft law on the special measures for strengthening financial functions provides a framework to inject public funds into both banks which are planning to merge or consolidation and ones which are not planning to do so. Do you intend to facilitate re-organization of financial institutions by an increase of merger and consolidation, or expect financial institutions which are not planning to merge or consolidate to utilize this scheme as much as possible?

A.

There is no need to focus solely on mergers or consolidations as an available approach. An important point is to strengthen financial functions by increasing operational efficiency, enhancing profitability and gaining equity participation. There would be various ways to strengthen financial functions.

In general, mergers and consolidations may be substantially important means but they are not the privileged ones. The important point is to strengthen financial functions.